Liquefied Petroleum Gas Safety Association: briefing

Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
8 June 2005
LIQUEFIED PETROLEUM GAS SAFETY ASSOCIATION: BRIEFING

Chairperson: Mr E Mthethwa (ANC)

Documents handed out:
Liquefied Petroleum Gas Safety Association: Low Income Household Programme briefing

SUMMARY
The Committee heard a presentation from the Liquefied Petroleum Gas Safety Association of Southern Africa (LPGSASA) on its low-income household programme. Emanating from the 2002 World Summit on Sustainable Development in Johannesburg, the programme aimed to convert 3 million low-income households from paraffin to LPG use. An initial pilot project would concentrate on 250 000 homes. The Association informed Members of the benefits of LPG and asked them to become "champions" for the conversion process.

Members asked searching questions about LPG safety, efficiency and affordability; future costs and price monitoring; rural accessibility and the Association’s education programmes. The Committee indicated that it would assist the Association where it could, but insisted that an education programme to address ignorance on this would be vital to ensure public safety.

MINUTES

LPGSASA briefing
The Liquefied Petroleum Gas Safety Association of Southern Africa team consisted of Mr D Townsend (Managing Director); Mr M Gaba (Deputy Managing Director); Mr P Harris (Consultant) and Mr K Robertson (Market Manager).

The purpose of the presentation was to update the Committee on extensive developments in the Liquid Petroleum Gas (LPG) industry’s low-income household programme. The programme had resulted from a decision made at the World Summit on Sustainable Development (WSSD) held in Johannesburg in 2002. It aimed to convert 3 million South African households to LPG use with a pilot project concentrating on an initial 250 000 households. The project had the support of the Minister of Minerals and Energy as it aimed to deliver household energy services to the poorest communities.

Compared to other thermal fuels, LPG was safer, cleaner, healthier, multi-purpose, portable and provided real value for money. The gas was stored in steel cylinders, was stable and could not spill. Very strict safety standards for cylinders and appliances existed. The gas could not "burn back" into the cylinder, leaks smelled, and one could not drink it as happened with illuminating paraffin (IP). LPG could be used for cooking, water heating, lighting, room heating and refrigeration.

Markinor research in 2001 found that 511 000 households used IP safety caps. In 2000, 143 000 children had drunk IP and 53 000 children had contracted paraffin-induced chemical pneumonia of whom 4 000 had died. During 2000, 46 000 paraffin-related fires and 50 000 paraffin-related burns were reported. Of the latter, 31 000 (63%) were the result of exploding paraffin stoves.

The programme was a private sector, commercial initiative that aimed to increase the use of LPG by 3 million low-income households. It would only be available to households with an average income of less than R1 750 per month. Rural and urban customers would have easy access and the gas would be fairly priced relative to other fuels to make it affordable. However, a grant of R120 per household would be required to make the switch to LPG attractive. This grant would cover the cost of a cooking appliance to be fitted to the cylinder.

The LPG industry and commercial funding bodies would provide the resources. No government subsidies would be required. The customer would be offered a 3 to 6 kg gas cylinder and a subsidised cooker top. Normally customers would be charged R150 as a deposit for a gas cylinder. However, a deposit of just R50 would be payable with the industry subsidising the rest. Filling the cylinder would cost around R35 at a price of R6 to R7 per kg.

Currently, fundraising efforts concentrated on Eskom with a proposal submitted to the company in September 2004 for funding under its Demand Side Management programme. Funding the programme would assist Eskom as more LPG users would reduce its peak cooking load and would therefore require less investment in new power stations in future. The industry was currently awaiting a final decision that was being delayed due to alignment problems between the Department of Minerals and Energy (DME), the National Electricity Regulator (NER) and Eskom.

The Minister of Minerals and Energy had also requested the industry to pioneer the concept of Free Basic LPG for use in non-electrified areas. Government’s existing Free Basic Electricity policy also allowed for Free Basic Energy provision and the industry was currently discussing this issue with municipalities around the country. The idea was that LPG suppliers would provide each household in an identified area with a gas cylinder and cooking top, and would issue monthly coupons equivalent to the Free Basic Electricity grant. The customers would redeem the coupons for a subsidised refilled cylinder and the LPG supplier would in turn redeem the coupon from the relevant municipality.

A massive education and promotion campaign had been launched to convince people to convert to LPG and to enable its safe use. The Committee would play a vital role in this campaign. Members had been provided with cylinders and cooking tops and were being asked to be "champions" for the switch to LPG in their various constituencies. The Committee would also be asked to assist with the alignment between all stakeholders and to take oversight responsibility for the upliftment project.

Discussion
The Chairperson commented that it was vital that alternative sources of household energy were found because of the large number of paraffin-related accidents and deaths. A project aimed at the poor had to concentrate on safety and affordability.

Mr W Spies (FF+) asked whether it was possible to do a real comparison between LPG and paraffin-related accidents as the numbers of respective users differed dramatically at this stage.

Mr L Greyling (ID) agreed that the country should move away from paraffin, but asked for a cost comparison between LPG and an "eco-gel" for household cooking purposes developed by the Department of Science and Technology and solar heating. He also asked whether Eskom would be able to claim emissions reduction credits as a result of its proposed funding of the LPG pilot study.

Mr E Lucas (IFP) asked whether the cost of LPG would increase after the pilot study had been concluded and for a comparison between LPG and electricity prices. Rural accessibility would be crucial as the existing road network meant that people would have to walk long distances to pick up their cylinders. In addition, a "serious" education programme would be needed to inform the public about the safe use of LPG and the precautions that they would have to take.

Mr M Matlala (ANC) asked when and where the Association would start its education programme.

Mr C Kekana (ANC) commented that a common perception existed that gas cylinders could easily explode and that gas leaks led to death by asphyxiation. The industry had a "big job" on its hands to convince township residents of the safety of LPG.

Ms N Mathibela (ANC) asked whether the price of LPG would be monitored as she was aware of unscrupulous dealers that inflated the price paid by the end-users.

Prof I Mohammed (ANC) noted that he would like a comparison in therm between LPG and electricity to check the real energy efficiency of LPG. The cylinder swapping system meant that he was not assured of getting his own cylinder back after refilling.

Mr Robertson responded that safety education was vital and that the Association hoped it would be introduced at school level. The Association investigated all accidents reported to it. Unfortunately, most accidents (30 to 40 per year) resulted from ignorance and a lack of basic safety precautions. LPG was much safer than any other thermal fuel and a massive increase in its users would not lead to a concomitant increase in accidents. For instance, LPG could not be drunk and this immediately removed a massive hazard in low-income households.

Mr Townsend stated that all fuels were dangerous, but that incorrect perceptions of LPG would have to be addressed through education. Gas leaks had a prominent smell and users had to ventilate rooms immediately when the smell was detected. Gas cylinders did not explode often as they had a very high temperature tolerance. For instance, the Cape Town Fire Department had not found any exploded gas cylinders after recent shack fires in informal settlements. He was, however, very concerned about so-called cylinder dumping in South Africa as these cylinders did not comply with strict SABS standards. The Association was working closely with the Department of Trade and Industry and the SA Revenue Services to address this problem.

Mr Harris said that the "eco-gel" was not as efficient or cost-effective as LPG. Solar heating was quite efficient but the initial capital cost of about R3 000 meant it was not affordable for the poor. Emissions credits would only be available if very large volumes were traded. He was unsure if increased LPG use would enable Eskom to claim such credits.

Mr Townsend pointed out that the current price of paraffin and LPG was almost identical. Normal market conditions would determine the price of LPG in future, but it would remain comparable to other thermal fuels. The Minister of Minerals and Energy had made it clear that price subsidies would not be tolerated in the long-term and that subsidies would only be used to speed up the switch from paraffin to LPG.

Mr Harris said that LPG was fast replacing electricity in more affluent homes as it was a far more efficient energy source for cooking. LPG and electricity prices were comparable and the switch from electricity to gas could be made quickly and cost-effectively.

Mr Gama agreed that rural access to LPG was crucial. The Association was currently discussing the Free Basic Energy grant with municipalities and would address the issue of long distances in rural areas with distribution companies. The Association would target the KwaZulu-Natal, Limpopo and Eastern Cape provinces as they had the lowest number of electrified homes. Workshops would soon be conducted in the O R Tambo municipality in the Eastern Cape and would be extended to the other provinces as soon as possible.

Mr Gama pointed out that the LPG price would be set at supplier level and that the Association would "fight" distributors that added to the price. In addition, municipalities would award tenders to suppliers based on a fixed price.

Mr Harris promised to provide Members with a detailed price and efficiency comparison between electricity and LPG in writing. As the gas supplier companies owned the cylinders (therefore the need for a deposit), consumers would almost never get the same cylinder after refilling. This was however, very important as it was the responsibility of the supplier companies to conduct safety checks and regular maintenance on the cylinders. A private owner of a cylinder would have to take on this responsibility, which had serious safety implications. The Association encouraged dealers to refuse to handle privately-owned cylinders that were in obvious need of maintenance.

The Chairperson concluded that it was vital that poor communities were educated in LPG safety. Any education programme would have to address ignorance and take into account the levels of illiteracy found in the townships. The Committee would assist where it could in this process.

The meeting was adjourned.