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Aug 31, 2012

Developing countries converting to LPG, SA encouraged to follow suit

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Liquefied petroleum gas (LPG) use is becoming increasingly popular, with developing countries like Indonesia, Turkey, Morocco and India having converted to using gas instead of paraffin as their main domestic thermal fuel source in recent years.

Gas is now the main thermal fuel in many domestic, small, commercial and industrial applications worldwide, which has made local LPG bulk and cylinder distribution company KayaGas question why South Africa is not following suit.

At a conference on LPG supply in Southern Africa earlier this year, KayaGas MD George Tatham pointed out that if South Africa converted to LPG as its main fuel source, domestic carbon dioxide (CO2) emissions would decrease, paraffin would be replaced in low-income homes and the pressure on jet fuel supply would be reduced.

“LPG is safer, cleaner and healthier to use than wood, coal or paraffin. It is also cheaper than electricity,” said Tatham, adding that LPG is also more efficient than other fuels and better for the environment than solid fuels.

Further, less infrastructure is required, as it is cheaper and quicker to construct gas-fuelled buildings than those which use electricity.

“LPG is already 30% cheaper than electricity,” said Tatham, who believes it could replace electricity in all domestic and small commercial thermal applications within five years, which would also save South Africa 4 GW of electricity consumption. He added that converting from domestic power use to LPG use would also eliminate the need to construct another coal-fired power station, such as Medupi or Kusile.

“The Medupi power station will produce 4 800 MW and has so far cost R80-billion [to build],” he said, adding that conversion to LPG could save the country 3 700 MW a year at a cost of R12-billion.

In a comparative analysis of the LPG consumption habits of Indonesia, Turkey, Morocco and Brazil, Tatham highlighted features they held in common that, for South Africa, could provide significant insight into LPG conversion.

He recognised that LPG growth in the countries surveyed was mostly driven by urbanisation, increased household income and the construction of supply infrastructure.

Tatham pointed out that government support was integral to the success of LPG conversion in these countries and added that integrated planning across energy carriers produced the best results.

Another important observation was that subsidising the conversion to LPG use across the board was unsustainable. Tatham noted, however, that subsidising the transition process instead of the actual product was an option that worked well.

 

Indonesia, for example, realised that subsidising $4-billion of paraffin a year, which was the main domestic fuel in 2007, was unsustainable.

It was then that the country’s government launched the paraffin-to-LPG conversion programme, which aimed to provide 42-million domestic paraffin users with LPG. In launching the initiative, the Indonesia government distributed packages comprising a 3 kg refillable LPG cylinder, a stove and a free first refill.

Tatham said an Indonesia-style switching programme could work for South Africa in providing households with a cheaper energy source and reducing the impact of rising electricity prices.

“If managed well, the LPG industry and its subsequent growth could create manufacturing industries for LPG cylinders, valves, trucks and rail tank cars, as well as LPG appliances. “It could also create jobs, save our woodlands, reduce South Africa’s carbon footprint, increase the availability of jet fuel and prevent accidental fires caused by paraffin,” he said.

Why Is LPG Not More Popular in SA?

“There do not appear to be any shortcomings in policy, the regulatory framework or executive capacity,” said Tatham, who provided his reasons for KayaGas having difficulty introducing solutions to alternative energy in South Africa.

A lack of guidance and government strategy topped the list. These were linked to a lack of coordination between regulatory authorities and government entities.

He also stated that the combination of the various regulations hampered development, even if regulations were implemented efficiently.
“The effect of this is that even a small development can be delayed by years, which can hamper the supply of energy and economic development in South Africa,” he said.
Tatham suggested solutions for the lack of LPG development in South Africa, which included fast-tracking the licensing of filling plants to prevent the crossfilling of cylinders and encourage investment in them.

He added that, providing 1.5-million poor households with an incentive to switch to LPG from paraffin, wood, coal or electricity would encourage the transition and that Gauteng, in particular, would need to build inland LPG storage.

“Education and marketing must go hand in hand. Free appliances and a free first refill are therefore essential incentives,” he said.

Edited by: Chanel de Bruyn
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