Johannesburg - South Africa’s liquefied petroleum gas market should move toward deregulation through measures to spur competition, an antitrust commission recommended after a two-year inquiry into the industry.
“There are structural impediments to competition that may hinder the growth of the LPG industry,” the country’s Competition Commission said on Tuesday in an emailed statement. “There are significant bottlenecks in the regulatory environment which restrict the ability of potential competitors.”
Read: LPG shortages prompt more expensive imports
South Africa manufactures about 300 000 tons of LPG a year, generating sales of about R1.5 billion, the commission estimated when it began the probe in 2014. It conducted search and seizure operations at the offices of African Oxygen, Oryx Oil South Africa, EasiGas, Liquefied Petroleum Gas Safety Association, KayaGas and Totalgaz Southern Africa last year.
Some long-term supply agreements have been renewed with the same wholesaler for more than 25 years and may contain unlimited renewal clauses, the commission found. It proposes to shorten contracts, cancel automatic renewals and introduce an allocation mechanism where all wholesalers would bid for LPG volumes. The commission also recommended allocating a minimum percentage of volumes to small wholesalers.
Market participants and interested parties have until June 7 to submit comments on those preliminary recommendations.
BLOOMBERG