South Africa is facing a shortage of LPG gas.
South Africa is facing a shortage of LPG gas.

LPG shortage crisis continues in Western Cape amid facility glitch

By Sizwe Dlamini Time of article published Aug 12, 2020

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JOHANNESBURG - There seems to be no end in sight to the acute shortage of liquefied petroleum gas (LPG) in the Western Cape as the Sunrise Energy facility reportedly malfunctioned for the second time in less than six weeks.

While Sunrise chief executive Pieter Coetzee was unable to comment, industry players said the LPG terminal’s multi-buoy mooring again malfunctioned partly due to bad weather, making it unable to take delivery of LPG on Sunday.

Companies such as Total SA, EasiGas and Afrox are moving their vessels to Richards Bay, more than 1600km away, to import LPG to supply the Western Cape, according to sources close to the matter.

The sources said it would take about a week to make repairs to enable vessels to berth. This had a direct effect on their ability to supply LPG to clients, which include big and small businesses and households in the Western Cape.

When approached on Monday, Coetzee declined to comment and requested that questions be emailed for a response yesterday. There was no response at the time of compiling this report.

Hermanus Gas owner Stoffel Frick said his company incurred losses of more than R500000 because of the technical inadequacy of the sole importer of LPG in the province.

Frick called on the regulators to make provision for another LPG importer in the province, to enable their businesses to continue operating.

On July 8, bad weather had prevented a replenishment vessel from offloading LPG at Sunrise’s Saldanha terminal, as the vessel, according to Coetzee, could not enter the harbour for safety reasons as determined by the Transnet National Ports Authority.

Industry experts have attributed the shortage mainly to a technically inadequate terminal, built under an alleged monopoly arrangement.

“This is a crisis caused by the poor regulation of infrastructure and you’ve got a monopoly there and the prices are much higher than they should be.

“Meanwhile, there is a competing terminal already built, which is not being allowed to operate, which would have meant that immediately there would be an alternative supply of LPG for the Western Cape.”

In 2018, Sunrise, amid a court battle with competing Avedia Energy, said in its papers that it stood to suffer enormous irrecoverable financial losses if Avedia were permitted to continue to offload LPG at the Saldanha quayside, and wanted the court to block “further authorisations for it to offload LPG” at the quayside.

In the founding affidavit, Coetzee said: “Avedia’s offloading of LPG at the quayside threatens the economic viability of the Sunrise facility.

“The fact that Avedia has offered LPG at a substantially lower throughput fee than Sunrise Energy is able to offer - as a result of Avedia’s ability to offload over the berth - has already resulted in the diversion of business from the Sunrise Energy terminal.”

Coetzee said Southern Energy Trading, which had an exclusive supply agreement in place with Sunrise, had breached that agreement and bought LPG from Avedia.

“Sunrise Energy had also been in discussions with Southern Energy Trading to enter into a long-term supply agreement.

“Southern Energy Trading signalled that it is reluctant to enter into such an agreement, given that it can obtain LPG more cheaply from Avedia.”

George Tatham, the managing director at Southern Energy Trading, said LPG supply should not have been a problem in the first place, because the Western Cape had two import facilities. Tatham said the problem was that the existing competing terminal, owned by Avedia Energy, was not being allowed to operate.

Avedia Energy could not be drawn to comment.

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