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Household gas prices capped

Jul 12 2010 09:26 Francois Williams

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Cape Town -  Prices for liquid petroleum gas (LPG) will be capped from this week by the department of energy.

From Wednesday retailers at the coast can charge no more than R15.69/kg for LPG, and in Gauteng no more than R17.27/kg.

From August, LPG prices will be adjusted every month - like those of petrol and diesel.

Departmental spokesperson Bheki Khumalo said LPG is used mostly by wealthier South Africans for heating or camping purposes. But LPG is not readily available to low-income households, which generally use wood or paraffin for cooking or heating.

The department believes LPG prices are excessive because of the high profit margins along the entire value chain – from the filling of cylinders to the cash register.

The department said regulating the maximum retail price provides LPG industry players with fair compensation for their capital investment and operating costs.

A maximum retail price will also encourage competition in the industry, and make LPG more accessible to the public.

Khumalo said the wider use of LPG also accords with the department's policy to broaden the energy mix. LPG is moreover a safe and effective source of energy for cooking and heating, and an effective alternative to electricity.

A retailer who spoke to Sake24 did not believe the department would be able to enforce the maximum retail price immediately. Another retailer knew of the department's plans to regulate LPG prices, but had been unaware that they applied from Wednesday.

Cape LPG prices are currently around R20/kg, while a Rustenburg Sake24 reader had to pay R26/kg last week.

 - Sake24.
department of energy
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