STATE TO FO­CUS ON LPG PRO­POS­ALS THAT CUT GAS COSTS

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

The govern­ment will give pri­or­ity to the pro­pos­als con­tained in the Com­pe­ti­tion Com­mis­sion’s re­port on the liq­ue­fied pe­tro­leum gas (LPG) mar­ket that would have the best im­pact on low­er­ing the cost of gas and im­prov­ing mar­ket ac­cess in the sec­tor.

This ac­cord­ing to Eco­nomic Devel­op­ment Min­is­ter Ebrahim Pa­tel in an in­ter­view with City Press this week at the launch of Sun­rise En­ergy’s LPG ter­mi­nal in Sal­danha.

Pa­tel said the Com­pe­ti­tion Com­mis­sion’s LPG re­port had been tabled in Par­lia­ment.

“We are now work­ing through it with the de­part­ment of en­ergy. One of the core decisions the we have to reach is on the rec­om­men­da­tions set out. We need to con­sol­i­date and in­te­grate all the reg­u­la­tory is­sues in one agency.”

The rec­om­men­da­tions con­cern­ing ac­cess to the LPG mar­ket would prob­a­bly get pri­or­ity. Pa­tel said the govern­ment would like to see more play­ers in­cluded in the gas in­dus­try and for prices to come down.

“When you look at the in­ter­na­tional ex­pe­ri­ence, coun­tries that have ac­cess do­mes­ti­cally or through im­port­ing fa­cil­i­ties for gas have, gen­er­ally speak­ing, lower costs than many oth­ers. Gas pow­ers so much of the western part of Europe.

Pa­tel said South Africa’s per capita gas con­sump­tion was ex­tremely low com­pared to its peer coun­tries.

“Those rec­om­men­da­tions, in our view, that have the best im­pact on low­er­ing the cost of gas would be the ones we would pri­ori­tise.”

“We’ll be work­ing hard to im­ple­ment some of the rec­om­men­da­tions.”

Turn­ing to the up­com­ing amend­ments planned for the Com­pe­ti­tion Act, Pa­tel said that changes to the act would deal with is­sues of con­cen­tra­tion in the econ­omy and they would seek to com­ple­ment the govern­ment’s other ef­forts to open up the econ­omy.

“The changes would be aimed at giv­ing more op­por­tu­ni­ties to black South Africans but more gen­er­ally to pro­vide op­por­tu­ni­ties for new en­trants. The dy­namism of the econ­omy is the con­se­quence of many things. It is the tech­no­log­i­cal base, it’s the en­tre­pre­neur­ial en­ergy that you bring, it’s the reg­u­la­tory en­vi­ron­ment, it’s the skills base of work­ers, and so on. In each of th­ese ar­eas, we’ve got to make progress.”

“The key things sur­vey af­ter sur­vey has shown, that rep­re­sent an enor­mous op­por­tu­nity for us, are those in­ter­ven­tions that un­lock the en­tre­pre­neur­ial en­ergy of more South Africans. We are not an ‘un­en­trepreneurial’ na­tion. In fact, there is a high level of en­ter­prise. The key is to give peo­ple op­por­tu­ni­ties in the for­mal econ­omy in ac­tiv­i­ties that are both le­gal and po­ten­tially fi­nan­cially re­ward­ing. It is to di­rect all the in­nate cre­ativ­ity and en­ter­prise to­wards grow­ing the econ­omy, to­wards pro­duc­ing goods and ser­vices that are of value. If you look at sur­veys of South Africa and you see the bald fig­ures about en­trepreneur­ship, gas rep­re­sents an op­por­tu­nity to open up and get in more en­ter­prise.”

“We ac­cept the point – it’s not only in the gas in­dus­try – it is much more broadly. There­fore, the Com­pe­ti­tion Act changes will seek to deal with it.”

“Our cur­rent act prin­ci­pally deals with two kinds of is­sues. One kind is a trig­ger – where one com­pany seeks to buy an­other com­pany – like a merger or ac­qui­si­tion. That is reg­u­lated and it re­quires reg­u­la­tory ap­proval. The other one is cor­po­rate be­hav­iour that the law re­gards as un­ac­cept­able or il­le­gal; such as fix­ing prices, ac­tiv­ity of car­tels, abuse of mar­ket dom­i­nance. What our law hasn’t pro­vided for thus far are is­sues around struc­ture. You have highly con­cen­trated mar­kets where you can’t draw a di­rect link be­tween the lev­els of con­cen­tra­tion and price fix­ing or car­tel be­hav­iour but where none the less it has a neg­a­tive im­pact on the econ­omy, on en­ter­prise and in­no­va­tion. So it is those sets of ar­eas that the amend­ments will seek to speak to.”

Pa­tel de­clined to say what his amend­ments to the Com­pe­ti­tion Act would be.

“I will ob­vi­ously not talk about that until I’m ready to make those an­nounce­ments.”

“When you have more op­por­tu­ni­ties in­vest­ment flows to [a sec­tor]. In this case, we have taken a mea­sure that ex­pands the sup­ply of a good, in this case gas. It can only work well if it is ac­com­pa­nied by other ef­forts in a mar­ket to decon­cen­trate dis­tri­bu­tion net­works and pro­vide more op­por­tu­ni­ties for peo­ple.”

Turn­ing to the R1.5 bil­lion steel in­dus­try com­pet­i­tive­ness fund which Pa­tel an­nounced in his bud­get speech this year, the min­is­ter said the first set of ap­pli­ca­tions had been re­ceived for al­lo­ca­tions. “We ex­pect we would move ex­pe­di­tiously on those and as soon as we have the first round of ap­provals we will make a public an­nounce­ment.”

Ebrahim Pa­tel

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