The government is developing an ambitious plan for every household in the country to use gas for its cooking and heating needs. The plan, which includes regulating the price of gas, foresees the development of special import facilities at the country’s harbours to ship in vast quantities of liquid petroleum gas (LPG) from gas-rich countries such as Algeria.
The plan is part of the government and Eskom’s demand-side management strategy to reduce the need to develop unnecessary power stations.
The switch will be voluntary, but the government intends regulating the LPG price to ensure it is price competitive with electricity.
Targeting household cooking and heating reduces pressure on the electricity grid between the key hours of 6pm and 8pm, when electricity demand is at its highest.
This will obviate or delay the need for new power stations, which can cost billions of rands and take years to develop. The gas-import strategy has significantly lower capital costs and time to completion.
LPG is a by-product of the refining process, which industry outsiders say is sometimes burned off or flared as waste.
Insiders disagree, with one source saying that LPG is used as an energy source and as part of refinery management. This is particularly the case in South Africa where refineries are running close to capacity. LPG being flared could be required by operational and safety requirements, says the source.
News of the government’s gas promotion strategy comes against the background of increasing LPG prices and continuing shortages in parts of the country such as Gauteng.
The shortages have variously been blamed on cold weather, unscheduled refinery shut-downs, panic hoarding and a switch, particularly in the Western Cape, from electricity to LPG following problems at Koeberg earlier this year that caused widespread electricity cuts.
LPG prices have soared in the Western Cape, one government official says, leading the industry to ship supplies there rather than to areas where prices are lower.
South Africans have little history of using LPG, its most widespread consumer use being by the relatively affluent for cooking and camping.
The country has not, as a result, developed the required infrastructure to import LPG when shortages or bottlenecks arise in the domestic market.
South African Petroleum Industry Association director Colin McClelland says the industry has begun importing LPG to meet current demand. Its problem now is to get supplies, which land in Durban, and get railed or trucked to Gauteng, which still has widespread shortages.
The chief director of hydrocarbons at the Department of Minerals and Energy, Nhlanhla Gumede, says the government aims to “shift people away from using electricity, for cooking and heating, to gas.” Gumede suggests that Algeria is a likely supplier of large quantities of gas and that it could partner with local players such as the state-owned PetroSA.
Algeria is rich in natural gas, which has different properties to LPG and comes from the conventional refining process. Gumede says condensate, which is separated from natural gas, is used as a source for LPG. Current supply shortfalls arise in part because the country does not have the infrastructure to import and distribute LPG.
Gumede sees opportunities for new and existing players in facilitating a widespread switch to LPG. A regulatory framework is being developed to control LPG prices. At R16 a kilogram in some areas, the current price is about twice what it should be. Regulation should take effect next year, he says.
Eskom’s Andrew Etzinger, who is implementing demand-side management programmes in the Western Cape following the power cuts, says Eskom aims to convince 100Â 000 households to swop their electricity stoves for gas cookers.
Currently 20Â 000 have made the switch. An agreement managed by the Department of Minerals and Energy supplies gas to low-income households at 50% of the LPG price in the province.
Etzinger says switching 100Â 000 users to gas will save the equivalent of 50MW of electricity. If the programme is rolled out nationally “a couple of thousand megawatts could be saved”.
The 50% reduction in the LPG price makes gas costs equivalent to that of electricity. Households switching to gas receive an effective additional subsidy of about R30 a month over a five-month period.
Etzinger says that if consumers want to switch back after having tried gas, this is “no problem”.
Building a new power station carries the cost to Eskom of R10-million per megawatt generated. Reducing demand — such as through the use of low-wattage, long-life light bulbs — has the equivalent cost of R3,5-million per megawatt. Switching to gas costs only R1,5-million per megawatt.
Etzinger says gas trials in the Western Cape are really the start in South Africa of an entirely new energy strategy, which can be rolled out nationally.
McClelland says the fuel industry has been investigating the supply of LPG to low-income households as a safe alternative to paraffin, which is flammable but can be sold in small, easily transportable quantities.
One possibility is moving LPG in bulk to townships where gas canisters can be filled.
All gassed out
As a small, infinitesimal contribution to keeping Capetonians warm this winter, I recently bought a gas heater. I barely got to use it when Gauteng ran out of gas and I could not refill it.
Then my friendly neighbourhood supplier slipped me a replacement, which I decided not to use because our family also cooks with gas.
Numerous press reports, including in the Mail & Guardian, quoted industry types, hand-on-heart, saying the shortage was over and canisters were winging their way to Gauteng even as they spoke. Good job we saved the canister for cooking, otherwise we’d now be hungry as well as cold. Bring on the Algerians, I say.