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The Competition Commission planned to deliver the results of a liquefied petroleum gas (LPG) market inquiry by March 2016 – six months later than anticipated.
The market inquiry, which would now kick off on September 15, had initially been scheduled to start in June and conclude by October 2015.
This emerged after the commission on Friday retracted the terms of reference published in June, citing errors in the LPG background overview sections, and republished the amended version.
The aims and rationale of the three-phase market inquiry remained the same – to understand and promote competition in the local LPG sector, which generated a turnover of about R1.5-billion a year from the manufacture and sale of about 300 000 t of LPG.
“The main aims [of the inquiry are to] examine whether the supply bottlenecks in the LPG sector may serve to create circumstances or incentives that serve to distort, prevent or lessen competition, [as well as to] analyse the current price regulatory framework and its impact on competition in the sector,” the commission stated in the terms of reference.
LPG had been identified as a strategic alternative energy source in response to South Africa’s constrained power supply and increasing electricity prices, and demand for the gas was growing.
The commission believed that, to effectively meet these demands, the sector needed to function effectively, with “consideration given to how competition principles may shape efficient market outcomes”.
This was expected to benefit low-income households in particular, the document noted.
LPG was currently underused as an energy source in South Africa, with only 3% of households using LPG as their main energy source for cooking.
This could be owing to the limited supply – with imports supplementing the domestic supply – and the relatively high price of LPG.
The commission planned to gather relevant information, data and evidence; research the industry background; review the regulatory framework and supply agreements along the value chain; and hold consultations with the relevant stakeholders during the first phase of the inquiry.
Phase 2 would see the commission define product and geographic markets, assess the competition dynamics in the defined markets and analyse factors impacting competition, before drawing conclusions on the state of competition.
In the third and final phase, it would publish a report on the state of competition in the LPG sector and engage with stakeholders on the recommendations made in the report.
The market inquiry would include business enterprises along the LPG value chain, such as manufacturers, wholesalers, distributers and retailers, end-users, government departments, public entities, regulatory authorities and industry associations.
The public would also be invited to participate in the inquiry during the information-gathering phase.