Johannesburg – The liquefied petroleum gas (LPG) industry has been shaken up by the release of the Competition Commission's market inquiry report on Monday calling for a raft of price and regulatory changes.
Delivered at a briefing in Pretoria, the report shows how there are only four major wholesalers accounting for more than 90 percent of the market; adding that this is an anomaly that the Commission needs to keep monitoring "as the structure is conducive for collusive behaviour".
The four wholesalers are Afrox, Oryx Energies, Easigas and Totalgaz. The report added that the four companies all "have foreign origins with some level of BEE participation".
Overlapping mandates and misaligned regulatory activities between energy regulator Nersa and the Transnet National Ports Authority (TNPA) were also identified as bottlenecks that lead to delayed approvals for infrastructure related licensing, creating "uncertainty amongst market participants regarding approvals for constructing import and storage facilities at ports".
In this regard, the Commission has given both bodies until June next year to align their "adjudication processes", and that there should be a "sequencing of legal processes".
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The Commission also found that 80 percent of LPG is used by industrial users, while only 20 percent is used by households. Economic Development Minister Ebrahim Patel said at the briefing that this figure presents an opportunity to further decrease the price of LPG so the country can be on par with global economies, which use the gas to drive their economies.
Patel added that he will be tabling this report in Parliament "within the next 10 days" in order to assist government to understand the sector better, and to promote transparency.
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