South Africans pay more for gas than consumers in most parts of the world, and Capetonians — who are being encouraged to switch from electricity to gas — are essentially subsidising Eskom’s inability to supply electricity in the region.
And while Eskom’s ”Turn on to Gas” campaign in the Western Cape might provide a short-term solution to the winter energy crunch, in the longer run, consumers will fork out more for energy.
Lower-income households in the province have borne the brunt of Eskom’s incapacity, exchanging more than 15 000 two-plate stoves for gas cylinders and cookers.
While an informal agreement between gas suppliers and Eskom hopes to ”cap” gas prices in low-income areas, the industry will have to police itself on profiteering.
”I suppose distributors could exploit the market, but the industry has agreed not to do so,” said BP’s Daryl Gabin.
The retail price of liquid petroleum gas (LPG) is not regulated in South Africa, resulting in what many consider exorbitant mark-ups on the fixed wholesale price or ”maximum refinery gate price”, as it is known in the industry.
According to a 2003 United Nations Development Programme report, South Africans pay up to 76% more for gas than do consumers in the United States and Australia.
The four main gas suppliers, Afrox, TotalGaz, Easy Gas and BP, are reluctant to divulge how much they pay for gas and charge distributors.
They all say that the price of LPG is linked to that of crude oil, and that increases are linked to petrol price hikes. The Department of Minerals and Energy, they claim, regulates the gas price.
But this is at best a half-truth. LPG is much cheaper than petrol. The basic fuel price, regulated and controlled by the government, is currently about R6,60 per kilogram, including taxes.
The maximum refinery gate price for LPG is R4,37 per kilogram, an amount determined and regulated by the department. But what suppliers charge consumers is their business. In most cases, they charge between R13 and R18 per kilogram — more than treble the ”gate price”.
According to Darren Authers of Afrox in Cape Town, LPG retails for between R9 and R10 per kilogram — double the amount paid at the refinery. Shop, garages or corner cafÃ