Minister Gwede Mantashe: Liquified Petroleum Gas Week Conference

Programme Director,
CEO of the World Liquid Gas Association, Mr James Rockall 
Director General of the DMRE, Mr Jacob Mbele
Captains of Industry Distinguished Guests

It is with a great sense of honour and privilege to be engaging with you at this Liquified Petroleum Gas (LPG) Week hosted in South Africa for the first time under the theme “Energy For All”.

Despite our known reservations about the many energy conferences, we are honoured to participate in this conference as it aligns with our renewed focus on elevating the South African petroleum sector from running a second fiddle to other sources of energy.

In its World Oil Outlook 2050, the Organisation of the Petroleum Exporting Countries (OPEC), estimates that “global energy demand is set to expand by 24% in the period to 2050… and that all primary fuels are set to increase with the largest increase expected to come from renewables, the second largest increase from natural gas, and significant increases are expected from oil, nuclear, and hydro”.

Notwithstanding the extreme pressure imposed on nations to phase-out fossil fuels, including coal, the outlook highlights the need for expansion in all energy sources to meet the growing energy demand. It implores on energy stakeholders and policymakers to join forces and establish a long-term investment-friendly environment that benefits both the developed and developing nations.

For its part, the South African government remains committed to advancing policies that endorse a diversified energy mix to provide reliable and efficient energy service at competitive rates and that is socially equitable through expanded access to energy at affordable tariffs, as well as energy that is environmentally sustainable by reducing emissions and pollution.

The enactment of the Upstream Petroleum Resources Development Act (UPRDA) is a testament to our determination to create an enabling environment for the acceleration of exploration and production of the nation’s petroleum resources.

Not only will the UPRDA provide for the orderly and sustainable development of the petroleum resources, but it will further advance the national developmental imperatives and provide for equitable access by designating the South African National Petroleum Company (SANPC) as an entity responsible for managing the state’s carried interest in petroleum rights and enable it to exploit some resources in its own right. The recent approval of the SANPC Bill by the Cabinet for onward transmission to Parliament is yet another demonstration of our government’s commitment to ensuring an adequate supply of liquid fuels.

In its 2023 vision for clean cooking access for all, the International Energy Agency (IEA) reported that “2.3 billion people worldwide - nearly one third of the global population - still cook their meals over open fires or on basic stoves (using) firewood, agricultural wastes, and animal dung”.

The LPG is poised to play a catalytic role in providing effective solution to household’s thermal requirements, thereby reducing the heavy reliance on traditional methods for cooking and space heating.

Recognising Asia’s progress in reducing the number of people without access to clean cooking, we convened the South Southern African Development Community (SADC) - India LPG Summit in 2023 to draw lessons from India’s success story. Encouraged by India’s story, we adopted a number of key resolutions to transcend the South African LPG sector, which include but are not limited to:

• Fostering behavioural changes by effectively communicating the safe use and benefits of LPG through a sustained and well-coordinated safety campaign.
• Fostering ongoing engagements between government and the industry to address the economic disparities in South Africa’s LPG structure, thereby adopting the India model in the LPG market.
• Enhance inclusivity and economic empowerment by supporting Small, Medium and Micro Enterprises (SMMEs) and collaborating with LPG majors to undertake Corporate Social Investment (CSI) initiatives to support LPG usage

Whereas substantial progress is being made on the LPG usage in South Africa, as demonstrated by the steady increase in LPG sales and demand over the past 10 years, the illegal filling of LPG cylinders continues to pose a major challenge to the industry. This compromises safety in the sector, which may result in excessive damage, injuries, and even fatalities. It is, therefore, incumbent on all stakeholders - government and industry - to act against the illegal filling of cylinders by ensuring that the LPG industry complies with the relevant LPG cylinder management regulations.

Notwithstanding the challenges with illegal filling of cylinders, the reduction in household incidents reported to the LPG Association of South Africa demonstrates the effectiveness of our campaign which seeks to educate LPG users on the safe use of LPG. However, much more needs to be done to attain the desired objectives of the campaign, including ensuring that the cylinders undergo routine checks and revalidations to prevent the hazardous impacts of LPG use.

We cannot overemphasise the importance of meaningful participation of previously disadvantaged individuals in the liquid fuels industry. The truth of the matter is that the deficiency in the participation of black people in general, and Africans in particular, is a serious impediment to the expansion of the LPG industry and investment. This is evident in the dominance of a few wholesalers who continue to resist collaboration, thereby preventing the entry of small players into the sector.

Enhancing inclusivity and economic empowerment remains a priority of this government as evidenced by the Cabinet’s approval to publish the Petroleum Products Amendment Bill (PPAB) for stakeholder comments. Through this bill, government intends to promote the transformation of the petroleum and liquid fuels sector by encouraging equity and ensure that the persons involved in the manufacturing or sale of liquid fuels are regulated. The Bill has since been published for stakeholder comments until 20 December 2024. We, therefore, urge the industry to utilise this period and enrich the Bill with its valuable inputs.

Mindful of the increased global demand for natural gas in 2024 and the expected upsurge in 2025, as forecasted in the latest edition of the IEA’s Global Gas Security Review, our government is moving with the necessary speed to finalise the country’s Gas Master Plan. Having addressed all stakeholder comments on the draft plan, we are now running the final model for the plan which will outline the role of natural gas

within the context of our energy mix and give us indicators of the sources of gas and what infrastructure needs are there, and to be developed by when. The plan further designates Richards Bay, Ngqura, and Saldanha Bay among the areas that have been set aside for the Liquified Natural Gas (LNG) port terminals, thereby strategically positioning our country to capitalise on recent gas discoveries in the southern market.

The increasing price of crude oil is showing how vulnerable Africa is to geopolitical tensions. Heightened geopolitical tensions are likely to erode some of the price cuts that we have seen in liquid fuel over the last few months. We can protect our economies by securing our own crude oil and strategic petroleum products, which can be made available to the market during such times. Additionally, investment in local refining capacity is a no regret option for African nations; hence, we continue to pursue local refining, for which the SANPC will play a major role going forward.

In closing, allow me to reiterate the declaration by the delegates to the Clean Cooking in Africa Summit that “the strategies taken by countries to advance clean cooking will depend on local context, and that each country has sovereignty to shape this agenda in a manner consistent with people-centred energy transitions”.

For its part, the South African government will continue to implement its LPG rollout strategy to ensure greater access to safer, cleaner, more efficient, environmentally friendlier, and affordable thermal fuel for households.

I thank you.