By Debra Matabvu
The Zimbabwe Energy Regulatory Authority (Zera) is working on a pricing framework for Liquid Petroleum Gas (LPG) as it moves to protect consumers against arbitrary price hikes by retailers.
The commodity has become an integral energy source for domestic and industrial use.
The pricing formula, which is set to be operational soon, is currently being fine-tuned.
While the law, through Statutory Instrument 57 of 2014, mandates Zera to regulate gas prices, the industry regulator has largely been leaving industry players to set their own prices.
Zera head of petroleum, Engineer Andrew Guri said they are still consulting various stakeholders.
“We had not regularised the sector as it was still in its infancy, the commodity was being used as alternative energy,” he said.
“The industry was self-regulating and the prices were determined by retailers. However, we now feel the industry has matured and that is why we need to get involved to protect the public.
“We already have the templates of how it will be regularised and we are now working on a pricing framework that will be used by the industry.”
Presently, there are marked disparities in the pricing of the commodity.
Although service stations are retailing their product between $10 and $13 per kilogramme, some private players are selling the commodity between $14 and $18 per kg.
Premature move?
But industry players believe it is still premature for the regulator to monitor prices in the sector as they are importing the commodity without Government’s assistance.
Chairperson of the Liquid Petroleum Gas Association Mr Ronald Ndoro, who is also Kensys Gas LP director, said if the planned pricing system is to work, the Government should be strategically involved.
“Currently, there is shortage of infrastructure in the gas industry, the private players foot all the bills in terms of importing the gas, transporting and storing it. Therefore it is premature for Government’s pricing intervention,” he said.
“There is need for strategic involvement, things like constructing storage facilities, before pricing regulations can be introduced.
“At the moment, pricing of the commodity can only be dictated by those in the industry.”
He said the pricing discrepancies between indigenous retailers and some service stations are due to economies of scale, adding that big businesses have the capacity to optimise prices.
Mr Ndoro said: “The type of players in the industry are different. The bigger companies might want to recoup their money over a long period of time, whilst the smaller players might want to recoup their money over a short period of time to enable restocking.”
At the beginning of this year, Zera had licensed 22 gas wholesalers and about 1000 retailers.
Owing to reduced electricity generation and the proliferation of new settlements that are not connected to the grid, gas imports have been rising over the years.
Last year, the country imported 45 million kgs of gas, compared to 5 million kgs imported in 2010.
The country’s five power stations are producing about 742 MW against demand of more than 2 200MW.
Experts say Zimbabwe can save 104MW of electricity if consumers switch to gas for cooking and heating. The Sunday Mail
