For some time now, the benefits of liquefied petroleum gas (LPG) to South Africa – lightening the load on a strained national electrical grid; reducing energy poverty; and improving the health and safety of South Africans, particularly women and children – have been largely, frustratingly, moot.
That’s because until recently we have not had a consistent, reliable supply of LPG in South Africa. That has begun to change; rapidly. South African companies are taking the plunge and ushering in a new era of LPG availability. And that is a very good thing for the country, considering the constraints on energy supply and resultant effect on costs.
LPG – consisting of butane, propane or a mix of the two – is optimally suited for three things: cooking, heating water and heating spaces. It is the latter that leads to the demand for LPG being cyclical, with its usage spiking significantly over winter.
LPG is produced as a by-product of the petroleum refining process. In South Africa, it has been mainly available from local refineries, and that supply has not been large, constant or reliable enough to accommodate sharp seasonal swings in demand.
It took a while for business to decide to put in place what was required to mitigate this inconsistent supply: namely a method for ships carrying LPG from foreign refineries to easily offload the gas, and sufficient storage capacity to smooth spikes in demand.
In 2017 we saw the launch of the first project to address these requirements – Sunrise Energy’s R1.02-billion open-access LPG import and storage terminal, in Saldanha Bay in the Western Cape. The Sunrise Energy terminal is a state-of-the art, immensely sophisticated facility, especially in terms of safety and the efficiency of loading and unloading of gas.
Shortly after the launch of the Sunrise terminal, the construction of an even larger facility was announced. Bidvest Tank Terminals, in partnership with international LPG specialists Petredec, are building a massive mounded storage facility in Richards Bay, on track for completion in winter 2020.
The Bidvest facility will have a capacity of 22 600 tonnes: four times that of Sunrise Energy’s. It will comprise the world’s largest-ever LPG-storage tanks. It features its own docking facilities, and direct access to railway lines, allowing the gas to be easily transported inland to the country’s largest markets. The gas will be transported by Petredec from refineries in the US and Middle East, meaning that the market will be inoculated against local supply shortages. It is, in short, a game-changer, ushering in a new era of cost-effective, reliable energy for South Africa.
This new era is long overdue. LPG is, for starters, the perfect complement to a national energy grid operating at its limit. LPG is optimally suited to cooking, heating water and heating spaces, and these functions mainly take place in the mornings and evenings – precisely when the national grid is under the most pressure. To quote Sunrise Energy CEO Pieter Coetzee: “LPG is between 20% and 50% more cost effective than electricity for light commercial and domestic thermal applications. LPG could help transform South Africa’s energy space into a more favourable mix.”
LPG is also well overdue a concerted effort to place it in newly built houses, and in the houses of low-income consumers, where heating is traditionally accomplished through burning wood or paraffin. According to the World Health Organization, each year nearly four million people die prematurely from illness attributable to household air pollution from these cooking practices, and close to half of deaths due to pneumonia among children under five years of age are caused by soot inhaled from household air pollution. LPG is a cleaner, safer, healthier alternative to ‘traditional’ products including wood, coal, dung and paraffin.
In addition, there is a tremendous benefit in terms of employment and the growth of down-stream industry that still remains to be unlocked. The distribution, safe refilling of cylinders and servicing of LPG appliances has resulted in innovative small-business opportunities in countries such as India and Brazil where the LPG market is more mature than ours.
The construction of facilities such as Sunrise’s and Bidvest’s are the biggest single step required to unlock the potential of the industry, but not the only one. We are sorely in need of a coordinated government policy on LPG; government departments would do well to communicate more effectively with the industry and amongst one another; and the current regulated pricing structure needs revision in order to take advantage of the potential cost decreases brought about by increased supply.
Despite these challenges, the sense of impetus and gathering potential in the industry is tangible. The LPG Safety Association of South Africa operates under a mandate from a Department of Labour to ensure that appliances and cylinders entering the marketplace are safe for use. And it is clear from the increase in number of applications we’re seeing, and through conversations with our members, that the market is increasingly bullish and poised for considerable growth.
Speaking at the launch of the Sunrise facility, then Energy Minister Mmamoloko Kubayi said: “Access to energy is critical to markets for economic growth. The sustainability of South Africa’s energy supply includes a diversified energy mix. For cooking, water heating and space heating, the efficiency of LPG is unrivalled. Having realised the benefits of LPG, it should be promoted on the same level as other energy sources.”
We wholeheartedly agree. For the sake of our economy, the creation of employment opportunities, our health, and our wellbeing, it’s about time.