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Interview

Kevin Robertson – CEO, Liquefied Petroleum Gas Safety Association of Southern Africa (LPGSASA)

05.12.2017 / Energyboardroom

Kevin Robertson, CEO of the Liquefied Petroleum Gas Safety Association of Southern Africa (LPGSASA), highlights the main activities and achievements of the association, the dynamic yet stringent safety regulations of the industry, the importance of safety and sustainable supply to industry growth, as well as their ambition to foster greater regional integration and harmonization of the LPG industry.

Kevin, having been CEO for the past three years, what have been some of the highlights of your term at the Liquefied Petroleum Gas Safety Association of Southern Africa (LPGSASA)?

“While many of our suppliers are still local, over the past five years, there has been an influx of imports, and it boils down to economies of scale in other countries where manufacturing facilities cater to far larger markets.”

Our crowning achievement in the past three years is our move out of the office block where we had previously been based, into our current location, which boasts a practical, hands-on training facility. This is highly significant because a key service we offer to the LPG industry is technical and practical training. All our training used to be theoretical, conducted within a training or board room, as a result of space limitation, and this was not ideal given the need for safety within our industry. We used to have to travel to different centers and deliver our training programs there, but now we are able to operate from our base here, which is fully equipped to train teams and individuals on various elements across the entire LPG value chain.

Furthermore, as a national entity, we make strong allowances to accommodate people coming from outside of Johannesburg, so that they are not too disadvantaged from a financial perspective.

How would you describe the regulation environment here?

There are many regulations and standards governing the industry, which fall under the Department of Labor. LPGSASA operates under a number of mandates, from training to verification and incident investigation.

Any appliance sold or distributed in South Africa needs to comply with local national safety standards. If someone wants to import or manufacture locally, they need to have their appliance tested by an accredited test-house that is affiliated with the International Laboratory Accreditation Cooperation (ILAC) as compliant with South African national standards. The testing can take place anywhere as long as it is with a test-house with the correct accreditation and certification, and the ability to test to our standards. Once testing is done and the report issued, the company makes an application to us as the body mandated by the Department of Labor. We verify that the paperwork is complete, correct, and complies with the requirements of the relevant verification scheme. We then issue a specific permit for that particular appliance type, after which the company can import, manufacture and/or distribute that appliance anywhere within the country. The same procedures apply to the manufacture or importation of LPG cylinders where the requirements are stringent, to say the least.

Overall, South African standards are fairly on par with international norms. We also assist the South African Bureau of Standards to establish and review national safety standards, and we are represented on their Technical Committees to make recommendations. This ensures that industry input is taken into account to help the Bureau keep the standards relevant. This fairly dynamic structure is critical to ensure not only the sustainability and viability of the industry, but consumer safety as well.

What common challenges do your members face?

Our membership is very diverse, with a number of different categories, from the major wholesalers to distributors, dealers, hardware, installers and so on. Membership is purely voluntary and our membership fees are kept low.

One of the issues that affects the supply chain is that prices are regulated by the Department of Energy: both the purchase price of LPG from refineries, the so-called maximum refinery gate price (MRGP), as well as the maximum retail price for domestic use. These pricing structures are not necessarily frequently updated, and that gap needs to accommodate distribution costs, staffing costs and so on, so from a distributor’s point of view, their costs are going up while that gap has not been regularly adjusted, so that is a major challenge for that sector of the industry.

On the hardware side, our members are looking for protection from non-compliant, cheaper appliances and cylinders that are illegally brought into the country. Prevention of entry at the borders is quite difficult – and there needs to be more awareness of this issue as well.

At the same time, LPGSASA is conscious of maintaining the delicate balance between protecting our members’ interests and maintaining an open and competitive industry. As an association, naturally, we welcome more players because that increases competition, drives prices down, makes products more available and competitive, which in turn increases demand – it is a virtuous cycle. However, any time an LPG-related incident occurs, there is a major negative impact on the entire industry regardless of the cause of the incident. The incident makes the headlines, and even when the accident was a result of improper use or installation by an illegal operator, or the like, it affects the reputation of the entire industry because it contributes to the erroneous perception that LPG is dangerous! The protection element is really about preventing illegal operators, or people without a responsible attitude to industry safety and compliance, from entering the industry and negatively affecting its reputation. Safety is really the most fundamental concern of the industry.

While many of our suppliers are still local, over the past five years, there has been an influx of imports, and it boils down to economies of scale in other countries where manufacturing facilities cater to far larger markets. We would love to see more local manufacturing take place here, both in terms of appliances and cylinders

How much potential do you see within the LPG industry in South Africa?

There is absolutely a huge amount of potential here! Current per capita consumption of LPG is approximately six kilograms, which is a tiny fraction of Morocco’s 68 kilograms, for instance. We are starting from such a low base that there is huge growth potential. It is also critical to note that increased usage of LPGas will see an increase in demand for cylinders, appliances and equipment, a more diverse distribution network and a greater demand for the installation of appliances – all of which will inevitably lead to employment opportunities of a large scale. South Africa has a significant rural community and the logistics of building power networks can be challenging and costly. Therefore, the transportability and versatility of LPGas make it a viable energy source.

The bottleneck has been the limited supply of LPG up until very recently in South Africa, particularly during the winter period. While our winter period is short, it does get pretty chilly – down to minus three degrees Celsius in Johannesburg, for instance – so there is a huge spike in demand during that time. Up until recently, it has been difficult to meet that demand due to a lack of reliable or sustainable supply, and many major companies have actually started to import their own LPG in response.

In 2007, we collaborated with Eskom, the South African power utility, on a project to incentivize people to convert from electricity to LPG during the period when the nuclear power station in Cape Town was temporarily inoperable. This was highly successful and involved many local communities, until we ran out of LPG! That put an end to the project and caused the industry to shy away from embarking on these demand-side projects until we have a reliable supply.

A number of new facilities have been, or are being, developed in South Africa, including the LPG import and storage facilities in Saldanha Bay, as well as one planned in Richards Bay, and another in the Eastern Cape, so we expect to see a considerable increase in the supply of LPG to the country in the near future.

We are also hoping to see a more concerted effort on the part of the government to promote the use of LPG as an ongoing and reliable energy source, not only during periods of major power outages.

There is also some attitude change required because there is a prevailing mentality that electricity should be the fuel of choice for all applications. LPGas is a clean burning fuel so it has minimal impact on the environment. Considering the severe health implications which more traditional fuels (like wood, coal, paraffin and biomass) have on peoples’ health, as well as LPGas’ high burning efficiency, LPGas should, in fact, be the fuel of choice for applications such as cooking, water heating and spatial heating

What role does LPGSASA play within international LPG networks?

The LPGSASA has been a member of the World LPG Association for many years and has derived much benefit from this. We also hold an annual LPG conference, and one of our goals for the next conference, scheduled for 7-8 May 2018, is to host something along the lines of a pan-African event and include industry members from various African countries, with a strong focus on the Southern African Development Community (SADC).

LPGSASA does conduct some training programs in neighboring countries like Botswana, Mozambique, Zambia and Namibia. While our programs are not yet recognized officially there, being trained and certified by us carries a significant amount of credibility. The longer-term goal is to try and harmonize standards across the region to foster more trade and integration.

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