Mineral Resources and Energy minister Gwede Mantashe has published a Liquefied Petroleum Gas rollout strategy for public comment.
Liquefied Petroleum Gas (LPG) is typically is a mixture of hydrocarbon gases including propane, butane and pentane. It is most often used in heating appliances and cooking equipment, but can also be used as a fuel for vehicles.
Mantashe’s rollout strategy states that South Africa should become more reliant on LPG going forward as it aims to diversify its energy mix and become less reliant on ageing Eskom infrastructure.
“Power shortfalls in recent years have also emphasised the need for South Africa to diversify its energy mix and, in so doing, reduce heavy dependence on electricity, especially for cooking and space heating.
“The LPG industry in South Africa can provide a quick and effective solution to household’s thermal requirements,” Mantashe said.
However, for this industry to provide these benefits there needs to be a change in the current LPG industry structure, the strategy states. This includes issues around production, importation., distribution, wholesaling and retailing.
The strategy aims to achieve this by further regulating the use of LPG in South Africa and incentivising the use of the gas for household use.
Becoming a powerhouse
Mantashe said that South Africa’s electricity power shortfalls recent price increases highlight the need to diversify the country’s energy mix and to alleviate the load on the electricity grid.
However, he noted that local production of LPG by all South African refineries is inadequate to meet local demand, and that this shortfall is currently being met by imports.
The minister said that there are also ‘socio-economic impediments’ to the introduction of LPG in some communities.
“These include the existence of a culture of non -payment for services rendered, such as illegal connections to electricity and outright refusal to pay for services rendered, and negative perceptions regarding the safety and effectiveness of LPG as compared to other energy carriers.”
He said that the rollout strategy seeks to provide a framework for the expansion of the use of LPG in South Africa, with a special emphasis on the household sector.
It identifies strategic options that the government can adopt in making LPG an energy carrier of choice for thermal applications, as well as the orderly development of the LPG market in South Africa, he said.
“As the number of people with access to electricity increased, the demand for electrical energy started to increase and this led to power shortfalls that emphasised the need for South Africa to diversify its energy mix and in so doing, reduce heavy dependence on electrical energy, especially for cooking and space heating.
“It is within this context that LPG has been identified as the most appropriate, efficient and effective fuel for household thermal needs and thus also contributing in addressing the shortfall mentioned above.”
Load shedding and Eskom troubles
The new strategy comes after South Africa was hit by the worst year of load shedding on record in 2020.
Data published by the Council for Scientific and Industrial Research (CSIR) in March shows that 2020 saw 859 hours of load shedding.
The most intensive load shedding was seen before the Covid-19 lockdown, which accounted for 63% of all load shedding seen in 2020. Most of this was stage 2 load shedding, the research body said.
On 18 March, Mantashe announced the preferred bids for South Africa’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) which also aims to diversify the country’s energy mix away from Eskom.
However, issues at the embattled Eskom appeared to worsen last week after it emerged that software giant Oracle has threatened to pull its services from the power utility due to a payment dispute.
Oracle claims it has been underpaid by R7.3 billion, but later reduced the amount owed by Eskom to R400 million. Eskom, however, only offered to pay R166 million.
Oracle provides a range of technical services to Eskom which the power utility said is crucial to its operations.
As part of its court application, Eskom said if Oracle withdrew its services it would have ‘catastrophic consequences’ on the company.
However, in a press statement on Sunday (5 April), Eskom said it has now put contingency measures in place to reduce its risk and reliance on Oracle.
“Eskom has assessed the risks in the event of Oracle withdrawing technical services support. Eskom has interim risk-mitigating processes in place to reduce the risk of its operations being disrupted,” it said.
The company said it finds it “regrettable the manner in which Oracle has handled the matter”. Eskom added that it “will pursue all legal avenues and will not be bullied into paying any monies outside of the legal processes”.