Gas prices may fall 25%

Cape Town - The proposed regulation of the price of LPG (liquid petroleum gas) in South Africa could make it 8% to 25% cheaper for consumers.

The Department of Energy's draft regulations for regulated wholesale and retail LPG prices have been published in the Government Gazette for comment.

In terms of these, LPG's wholesale and retail prices will in future be regulated in the same way as petrol prices.

On Wednesday, Sake24's enquiries at LPG dealerships showed prices ranging from R16.06 to as much as R19.66/kg to fill a 9kg gas cylinder.

According to the department's proposed pricing formula, the price should be R14.72 per kg.

This is based on the maximum price of R5.66/kg at the refinery gate. To this price are added primary transport costs (45c), operating expenses (R2.90), secondary transport costs (72c), operating capital (26c), depreciation (R1.26), a wholesale profit (R2.27) and a retail profit (R1.20).

The draft regulations base the LPG price at the refinery - which, according to the latest adjusted fuel price, will now be R5.34/kg - on the basic price of 93-octane lead-replacement petrol. Had the latest refinery prices thus been used in the formula, prices might have been even cheaper.

The proposal is that LPG prices, like petrol prices, be adjusted every month. The adjustments would reflect maximum prices, allowing dealers to charge less. Wholesale and retail profit margins should be reviewed every year.

Deposits on 9kg gas cylinders will be restricted to 45% of the cost of a cylinder and be adjusted annually.

Government has long been promising to make LPG more affordable for poor urban dwellers who rely mainly on paraffin for household energy. LPG is regarded as a safe alternative to paraffin which, in informal settlements, causes devastating fires.

During the recent power interruptions LPG was also been promoted as an alternative to electricity.

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.