IMPLEMENTATION OF MAXIMUM RETAIL PRICES FOR LIQUEFIED PETROLEUM GAS (LPGAS) SUPPLIED TO RESIDENTIAL CONSUMERS WITH EFFECT FROM WEDNESDAY, 14 JULY 2010
The Minister of Energy has approved the setting of maximum retail prices for LPGas supplied to residential consumers with effect from Wednesday, the 14th of July 2010. The Regulations and Working Rules to determine the maximum Retail Prices for LPGas are available on the website of the Department of Energy: www.energy.gov.za
. From August 2010, these prices will also be adjusted on the first Wednesday of each month as is the case with petrol, diesel and illuminating paraffin (IP). These prices will also differ from one Magisterial District Zone (MDZ) to the next due to the application of different transport tariffs applicable to each MDZ. The MDZs for LPGas will be in the same vein as those of petrol, diesel and IP which are already available on the Department’s website.
The Single Maximum National Retail Price for Illuminating Paraffin changes on a monthly basis on the second Wednesday of each month and is promulgated in the Government Gazette.
In the residential market LPGas is mainly used by the affluent portion of the South African population for heating and recreational purposes. However, LPGas is not accessible to a large portion of the South African residential sector and therefore these households utilise wood, illuminating paraffin, biomass and other non-conventional fuels for cooking and heating purposes. The main reason for the non-utilisation of LPGas by the less affluent portion of the residential sector is the non-accessibility of LPGas due to low demand culminating from exorbitant prices.
It is the view of the Department that these exorbitant LPGas prices, in urban and rural areas, stem from high mark-ups in the value chain (from cylinder-filling to retail) of LPGas. In order to terminate the continuation of this practise, the Department of Energy is of the view that by regulating maximum retail prices for LPGas supplied to residential consumers, they will no longer be exploited by exorbitant mark-ups whilst the role players in the LPGas industry are fairly compensated for their capital investments and operating costs. A maximum retail price for LPGas will also further enhance competition in the LPGas value chain and lead to the general accessibility thereof.
The greater use of LPGas for heating and cooking purposes by residential consumers are, in line with the Department’s policy stance of a broadened energy mix. LPGas is a safe and efficient fuel to utilise for cooking and space heating, being an effective alternative to electricity in this regard.
The Department will continuously endeavour to refine the elements of the maximum retail price for LPGas which will be mutually beneficial to all role players in the LPGas supply chain and residential consumers of LPGas.
Mr Bheki Khumalo
Tel No.: 012-444-4270
E-mail address: [email protected]