Gas shock for Joburg residents
Decision by Egoli Gas to cut supply leaves users with major costs
Residents in the central eastern suburbs of Johannesburg and some businesses in the inner city are up in arms over Egoli Gas’s decision to stop supplying piped natural gas, which they argue is pushing them to more expensive energy options.
This comes as South Africans scramble to source alternative energy in the wake of rolling Eskom blackouts and unreliable electricity supply.
Egoli Gas will cut off supply of piped gas on February 20. It says the pipeline has reached the end of its lifespan, and will become a safety issue unless it is replaced, which is not a cost effective option for the company.
Late last year, residents of Kensington, Malvern, Bertrams and Bezuidenhout Valley were issued with 30-day notices from Egoli Gas, warning that it would be terminating its supply of natural gas to the areas.
The company offered affected customers a rebate of R8,000 to assist them with converting from natural gas to liquefied petroleum gas (LPG, supplied via canisters) and a voucher of R1,850 for them to purchase LPG bottles or canisters.
Businessman and KiSS Properties owner André Maree, who runs student accommodation in Doornfontein and other parts of the city, said converting from natural gas would cost him more than R200,000 and he would be unable to raise accommodation fees for the 240 students.
“The termination of natural gas services will raise my costs, which I will not be able to recover. We rely on NSFAS [National Student Financial Aid Scheme] rates and if I raise those fees my accreditation for student accommodation will be taken away.”
Maree said he was informed that natural gas would be terminated by Egoli Gas in Doornfontein when a company representative came to inspect the property.
“Sometime in November one of Egoli Gas’s representatives came here unannounced to inspect gas-fuelled equipment. He said the gas supply to our area was going to be terminated.
“We were shocked since we have invested significantly in gas equipment at our property, which includes 15 large kitchens with 30 four-plate gas stoves. We were already upgrading our gas usage with the installation of gas water heaters as well as gas-powered electricity generators, specifically to reduce our reliance on City Power,” said Maree.
Katherine Barrett, who has lived in Kensington for 25 years, said she had relied on natural gas over the past few years because it was cost effective and reliable.
“My husband and I are pensioners, reliant on limited savings for our living expenses ... we have used natural piped gas to power two water geysers, two fixed heaters and our stove. In 25 years of usage, we have had only one outage of gas, which lasted less than 24 hours. This has been particularly convenient in periods of electricity load-shedding...
“A forced switch to LPG will require considerable investment in new gas pipes, gas bottles, as well as adjustments to our various appliances,” said Barrett.
“An estimate of the costs my husband and I are likely to incur is R28,000. This is not a sum of money we can easily afford. In addition, I have become aware of the fact that the cost of LPG per volume is higher than the cost of natural gas. This will put additional strain on the household budget.”
Another resident, Nosizwe Simoko, who has lived with her family in the area for about 20 years, said converting to LPG would cost them more than R46,000.
“[There are] broader implications. We are watching South Africa dissolve in front of our eyes and for a long time privatisation was seen as a solution because the government was not maintaining our infrastructure. But now we see a private company not maintaining and upgrading our infrastructure,” said Simoko.
“Residents have to now hold these people accountable. If we sit back and do nothing even the private sector will not be accountable. Eskom is unreliable and people are looking for alternative energy; this was an opportunity for this company to invest more in natural gas.”
The Kensington Residents and Ratepayers Association (KRRA) launched an urgent court application to stop Egoli Gas from going ahead with the termination and also asked the Johannesburg high court to review and set aside the decision.
However, the court dismissed the urgency of the application, giving Egoli Gas the green light. The KRRA is now considering appealing against the decision.
In its court papers, Egoli Gas argued that it would be costly and dangerous to continue supplying natural gas in the areas it identified. MD Nic de Waal said the company had set aside R5m to enable affected parties to convert to bottled gas.
“The current network supplying the
Kensington area has reached the end of its useful life, which means it cannot simply be maintained in a safe and functional state without totally replacing a huge distance of pipeline.
“A factor that has contributed to the corrosive effect on the pipes is galvanic corrosion, which resulted from an old tram line that previously operated above the gas line,” said De Waal.
He said the entire network would have to be replaced and that the cheapest way would be “slip-lining”, which entailed the insertion of a sleeve inside an existing pipe at a cost of R263m.
“Assuming the 500 affected households remain Egoli Gas clients, it works out at approximately R500,000 per client and at a usage of an average of 1 GJ per customer, Egoli Gas will recover its investment over 120 years or more. I have no doubt that the applicant will not be willing to provide the necessary financial guarantees to enable this kind of project,” said De Waal.
There is uncertainty in the company, he said, whether its gas supplier Sasol could guarantee further supply of piped gas. The company gets its gas from Mozambique through Sasol and distributes it to thousands of households and businesses in the city.
KRRA argues that the termination will affect many vulnerable community members because “many access natural gas as tenants to lessors that rent out their properties”.