New gas price proposal

2011-09-01 00:00

WHOLESALERS could stand to benefit from a proposed new pricing scheme for liquid petroleum gas (LPG), but consumers will still be protected.

This is according to the Department of Energy’s Robert Maake. “We’ve not started the process yet, but it’s in the financial year plan.”

Last week a parliamentary presentation suggested the pricing scheme change from using a formula linked to 93 Octane and be guided instead by international prices.

At the moment there is “no profit” for wholesalers and the change would likely stimulate growth in the industry by encouraging production, Maake said.

He added that the department will conduct its own research into the best pricing option and will also evaluate the information submitted by interested players. The department will consider linking the LPG price to 95 Octane or prices in developing markets. They are searching for a formula to “copy in South Africa”.

The communications manager of the wholesaler, Afrox, said they “work closely with government on matters of regulation” and the proposed pricing scheme is a “welcome one”. He added that they will be studying the research on the “real impact on LPG business” and continue striving to “improve the supply of LPG to South Africa”.

An Easigas spokesperson said “we’re very pro” the suggested change although it is a “long way” from being finalised. South Africa imports LPG so using an “international benchmark” makes sense.

Based on their calculations “it looks as if it might be a reduction” in price for the consumer, she said.

Afrox said LPG supplies are improving, but there “are still logistics” that need to be resolved in “getting the product into supply chain systems”.

Local LPG retailer, Neil Freestone, said the gas supply has “improved quite a bit, but we’re not out of the woods yet”.

Hilton Worx’s Ina Smith said they have had gas throughout the shortages, but the demand has reduced in the past month based on the warm weather. She said the rain is coming soon though and with it the cold weather.

A Raisethorpe gas retailer said he has gas but not the normal amounts. Supplies have come in “dribs and drabs”.

The demand is still “absolutely huge” he said despite the warm weather. “There’s always a demand for gas.”

The future change could benefit both the industry and consumers, Easigas said.

 

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