Shortage of bottled gas in SA pushes prices up

A shortage of bottled gas has resulted in long queues for consumers who rely on it for cooking and heating - and there is no immediate end in sight. Those who are lucky enough to find it are now paying more.

Andre Valkenburg, CEO of Gas & Equipment, says the problem started at the beginning of lockdown when refineries closed down and stopped producing liquid petroleum gas (LPG) for the South African market.

LPG is produced in the refining process of crude oil, whereas piped or natural gas is sourced from the earth’s surface - usually near oil deposits.

Valkenburg says his company is about 20 tons behind in deliveries and now, like every other gas supplier, is reliant on imports that "comes in dribs and drabs". Even if he does get a larger delivery, his delivery vehicles can only handle a certain amount.

Valkenburg says the unusually cold winter has also driven up the demand for LPG.

The price of gas has also increased.

In a statement issued by the department of minerals and energy on July 1, the price increased from 2129c/kg to 2577c/kg in Gauteng and from 1904c/kg to 2352c/kg in coastal regions.

This is because the base price used to be linked to the fuel price but has since been adjusted because imported gas costs more. This is according to Nirvan Brijlal, acting managing director of the Liquified Petroleum Gas Safety Association of Southern Africa (LPGSASA).

Now, because of the country's reliance on imports, the gas price is calculated according to the Saudi contract price, which is also the international index price, he said.

The weaker rand has also contributed to the increased cost of LPG for South African consumers.

The limited supply is due to a delay in the opening of an additional LPG facility in Richards Bay.

The facility, says Valkenburg, was meant to open in May, but Covid-19 has pushed this out to around September.

When asked for comment about the delayed opening, Bidvest, which owns the facility, referred TimesLIVE to a Stock Exchange News Service (Sens) statement issued in June, which said construction on the R1bn LPG terminal in Richards Bay had restarted and was expected to be operational by September. 

According to the Bidvest website, the facility is expected to have a capacity for an estimated 200,000 tons of LPG per annum, servicing half of SA‘s needs.

Brijlal said it is difficult to know when the shortage will end, but supply should increase as local refineries open as the lockdown eases.