Liquified petroleum gas (LPG) is said to be an efficient source of energy and the government has been advocating switching to it from electricity. But in the past few days gas users have gone through the frustration of gas unavailability, at a time when temperatures have dropped significantly.
According to the government and gas suppliers, the cold weather has led to higher demand for gas and the supply has run out. Gas sales typically peak in winter.
For the government, the increase is not necessarily a bad thing, as the Department of Energy’s deputy director-general of hydrocarbons and energy planning, Tseliso Maqubela, said this week.
It means more people are using gas instead of electricity, and that augurs well for efforts to curb power consumption. The department encourages residential consumers to use LPG for heating and cooking.
But this surge, especially in winter months, leaves the government and the energy industry with a big task — how is this demand going to be met? It is well and good to push consumers to use gas, but that drive is pointless if they are not going to find it, as is the case now.
At the moment, the bulk of the LPG sold in SA is produced at the country’s refineries owned by oil companies BP, Shell, Engen, Chevron, PetroSA and Sasol.
Avhapfani Tshifularo, executive director of the South African Petroleum Industry Association, the body that represents the petroleum companies, says the industry has attributed the shortage to a spike in demand.
Mr Tshifularo says the industry has maintained production levels. "Each and every one of our members has indicated that production has been maintained."
Engen Petroleum spokeswoman Tania Landsberg says the firm is producing at full capacity. SA’s biggest refinery, Sapref, is also operating normally and has maintained production of LPG in the past month, says spokeswoman Margaret Rowe.
Sapref, a joint venture between Shell SA Refining and BP Southern Africa, accounts for 35% of SA’s refining capacity.
National oil company PetroSA yesterday announced plans to increase LPG production in the face of the shortage by converting a percentage of its mogas molecules to LPG.
PetroSA chairman Benny Mokaba says PetroSA has decided to increase LPG production because the shortage affects the automotive industry, and "the country’s poorest" during cold spells. As a result, PetroSA will reduce its propane and mogas production by about 1500 "cubes" (a measure used by the industry to measure liquid gas) and 2000 cubes, respectively. It will increase LPG production by about 3000 cubes.
"In a country such as ours, PetroSA’s reason for existence is vital. We exist in order to ensure security of supply when market forces fail for whatever reason. It is our fervent hope that our efforts will go a long way towards easing the situation and warming South Africans in these chilly days," Mr Mokaba says.
Sasol spokeswoman Nothemba Noruwana says the petrochemicals company has not experienced any supply shortages and has increased production to more than 800 cubes a day instead of the scheduled 700 cubes a day. "We have recorded record sales over the past few weeks as we try and meet increased demand," Ms Noruwana says. Sasol is a joint owner of the Natref oil refinery at Sasolburg.
Mr Maqubela says demand has definitely gone up "and that is not a bad thing for us because it justifies infrastructure investment for imports. We need to invest in infrastructure and the key player there is Transnet."
LPG supplier Afrox has started importing gas to supplement supplies from the refineries, and spokesman Johann Cilliers says the company will get its gas imports by the end of the month. By importing the gas, it will incur additional costs which it cannot pass on to the consumers because the government now sets the maximum retail price.
The government says it regulates the maximum retail prices to make LPG more affordable and accessible to the lower-income portion of society. The department adjusts the maximum retail prices on the first Wednesday of each month.
"The Department of Energy is of the view that by regulating maximum retail prices for LPG supplied to residential consumers, they will no longer be exploited by exorbitant mark-ups whilst the role-players in the LPG industry are fairly compensated for their capital investments and operating costs," the department said when it announced its plans.
Prior to the regulation of the retail price, prices that consumers paid for LPG built up from the "factory gate price" at the oil refinery and this included a margin to cover storage, transportation and distribution. The government says it decided to regulate the retail price to counter what it said were exorbitant gas prices "fuelled by unpredictable and high mark-ups put by middlemen on the refinery gate price of LPG".
Mr Tshifularo says importing is the right course of action in the face of the surge in demand.