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Aug 17, 2012

MPs unconvinced about gas industry

Port|CoAL|Eskom|Gas|Petroleum|Storage|Electricity|Energy|Liquid Petroleum Gas|Safer And Cleaner Energy Source|Dipuo Peters|Infrastructure|Jabulani Ndlovu|Sisa Njikelana

MPs expressed disappointment on Friday at the energy department's progress in increasing the market share of liquid petroleum gas (LPG).

The department briefed MPs on an option for LPG expansion, which has yet to be approved by Energy Minister Dipuo Peters and her director general.

Parliament's energy committee chairman Sisa Njikelana said that by now the department should have had a full strategy, approved by Cabinet.

"We are far from satisfied on progress. At least by now, there should have been a first draft of a strategy, so the burden on electricity could be alleviated," Njikelana said.

The department's director for Petroleum and Petroleum Infrastructure Policy Jabulani Ndlovu gave MPs a broad overview of what interventions were being mooted to increase the supply of LPG, largely seen as a safer and cleaner energy source for cooking and heating.

This would largely need subsidies from government as the costs of LPG were still too high, particularly for the country's poor.

"Switching people from using other sources of energy such as wood, charcoal, electricity and paraffin to LPG would require funding in terms of subsidies," Ndlovu said.

The cost of subsidies was estimated to be about R630 million, based on the current pricing of both gas cylinders and stoves.

Ndlovu told MPs that low, middle and upper income groups should be subsidised.

"Our approach is that we want to expand the usage of LPG, irrespective of upper or lower income groups. Subsidies for higher income groups will, however, be lower," he said.

The demand for LPG has grown since Eskom's rolling blackouts in 2008, but has slowed since then because of the cost of gas.

"The higher price of LPG than electricity has resulted in the majority of poorer households switching to fuels such as coal, paraffin and wood," said Ndlovu.

There were still several constraints to developing the LPG market. These included storage and infrastructure availability, as well as behaviour like the hoarding of cylinders.

Ndlovu said there were a few new developments which could help.

"There is a company that is developing an LPG import facility at the port of Saldanha. Also there are a number of other companies which are constructing storage infrastructure for LPG," he said.

Edited by: Sapa
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