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All things gas are lit up for a business boom

| Supplier news

Eskom’s power crisis is pushing consumers and businesses to alternative sources of power - and one of the most obvious is gas.

Massmart, the parent of Makro and Game, said it had experienced a wave of demand for off-grid energy products, including solar lights, geysers, gas stoves and generators. The retailer said sales rise immediately after Eskom announces a new round of power cuts.

Shoprite, Africa's largest retailer, has experienced a similar surge in demand for these items compared with last year.

The retailers are finalising their year-end results and do not yet have sales figures, but this will become clear in the next few weeks when they begin releasing their numbers.

Another company making a killing from Eskom's problems is Egoli Gas. Managing director Shepherd Shonhiwa says the firm is well positioned to take advantage of the power crisis .

Egoli Gas Consortium was formed in 2000 from the sale of a government entity and is now majority owned by the Reatile Group, 65% of which is controlled by engineers Simphiwe Mehlomakulu and Sizwe Hopa. Standard Bank owns the rest.

Shonhiwa says the company has seen an uptick in people asking about gas as a way to power their households.

The cost of switching a household to gas is estimated at R15000 to R20000. Gas stoves can be bought for around R2000 - although you can pay much more - and a gas geyser is available for around R2 500.

Installation can slash electricity bills by up to 50%.

This would be a welcome relief to most as the National Energy Regulator of SA granted Eskom permission to increase its electricity tariff by 8% annually from 2013 to 2017.

Households can use two types of gas: liquid petroleum (LP) gas, or propane, and liquefied natural gas, or methane. LP gas is mostly sold in cylinders and has a higher energy content than natural gas, so less is needed to produce the same amount of heat.

Natural gas can only be provided to homes near established underground pipe networks.

Egoli Gas supplies 6500 households in Gauteng by way of its natural gas pipeline, a number that is expected to grow.

Its licence currently allows it to operate only within greater Johannesburg but it has ambitions to grow nationwide.

Egoli Gas imports some of its natural gas from Mozambique through Sasol's pipeline.

To connect more homes to its underground pipe network another major line would be needed. But this would be costly.

Shonhiwa says significant demand would be required for Egoli Gas to invest in a large infrastructural project. It would cost north of R100-million to build 10km of gas pipe, he says.

Other major resellers of gas include Easigas, BP South Africa, Total Gas and Afrox.

Shonhiwa says only 10% of Egoli Gas clients are households and that corporates account for 90% of revenue.

Companies that have switched to gas include MTN, which has its own gas-generator plant. It resells electricity to households near its head office.

Both Barclays Africa's head office in the Johannesburg CBD and the new Standard Bank building in Rosebank have their own gas plants.

FNB is currently converting to gas and public hospitals are expected to install gas-generator plants .

Around 30 000 tons of LP gas are manufactured and sold in South Africa annually, generating R1.5-billion in turnover.

The country imports 6 100 tons of LP gas a year through Richards Bay, Durban and Port Elizabeth .

PetroSA, the government-owned oil and gas company, has been given the mandate by the cabinet to lead developments in gas infrastructure in the Western Cape.

The Petroleum Agency of SA has been tasked with promoting the exploration and exploitation of oil and natural gas, both onshore and offshore.

This article was first published in Sunday Times: Business Times

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