BERA moves to regulate LP gas
Botswana Energy Regulatory Authority ( BERA) is currently developing Liquefied Petroleum Gas ( LPG) regulation structure to control the market and protect the consumers from exorbitant price increases by the retailers.
Appearing before the Public Accounts Committee on Tuesday, BERA CEO, Rose Seretse said although the authority regulates gas industry, it has not yet started regulating with full force as it was awaiting the outcome of the study findings which were completed in July this year. Among the study findings is that there is a need for the industry association to be formed so that they can speak with one voice. “Unlike the oil industry, the gas industry does not have an association so it is difficult to identify them together to regulate themselves and control them.”
She said the findings also indicated that there is lack of compliance in the gas industry, and the cross filling of cylinders is still an issue; there is heavy reliance on one source of gas which is mainly South Africa. The study findings also show the market is highly oligopolistic and limited competition with high barriers to entry. “The authority has been cautioning the industry players regarding the issues that have been identified. Currently, the legal framework has been drafted and it has been passed to Attorney Chambers.”
Over some time, the gas industry was left under the control of the private sector, mostly dominated by expatriates.
The LPG market in Botswana is primarily dominated by two large importers, being: Afrox Botswana, and EasiGas, which command a 45percent market share each, and their footprint is apparently across the country through the number of distributors they supply.
Meanwhile, the Competition and Consumer Authority ( CCA), through the African Competition Forum ( ACF), collaborated with other competition agencies in the SADC region to conduct a market inquiry on LPG and the findings indicate that there is extreme market concentration in the LPG upstream market characterised by high profit margins. “The possible anti- competitive behaviours found, point to: market allocation is in the upstream market; and abuse of dominance through cylinder exchange practice. Furthermore, in areas where some competitors are not present, consumers have limited choice as a result of difficulty in cross filling.”