Are you looking to venture in the profitable LPG business space in South Africa and achieve remarkable success? Look no further! This step by step guide outlines what you need to build a thriving business in this booming market. Whether you are seasoned entrepreneur or just starting out, this guide will help you navigate the unique challenges of LPG gas business in South Africa and assist you in building a formidable LPG business.
Understanding Regulations And Permits Required For Starting An LPG Business In South Africa
LPG business is a highly regulated space with various regulations, permits and acts that one must adhere to if they are to operate in South Africa. It is very important that the business owner be legally compliant to all the regulations and permits as they are meant for the safety of the people and properties.
LPG Installation Regulations
Below we look at the relevant acts and policies that govern safe installation of LPG in South Africa:
- The Occupational Health and Safety Act, 1993 – this one outlines all the responsibilities of the employers to ensure the safety and health of their employers, including those who maybe affected by the LPG installations.
- The national Regulator for Compulsory Specifications (NRCS) Act, 2008 – This act established the NRCS that makes sure that all LPG installations in South Africa, follows relevant standards and regulations.
- The Petroleum Products, 1977 – This act establishes the regulatory framework for building construction and contains provisions for the safe installation of LPG systems in structures.
- SANS 10087-1:2013- The technical requirements for LPG systems and their components are provided by this South African National Standard (SANS) for LPG installations.
The business will also need to get their Gas Certificate of Compliance (CoC) from their local authorities. The CoC can vary from city to city or local authorities but will basically contain stuff like; getting an accredited gas installer certified by the Liquefied Petroleum Gas Safety Association of Southern Africa (LPGAS) , applying for the certificate, paying a relevant fee, getting inspection and being issued with the CoC which shall be displayed at all times at the business premises. The CoC is valid for 2 years and must be renewed annually.
Market Research and Analysis for Your LPG Gas Business
Before you jump into the LPG business, it is necessary that you do your market analysis and research first. Market research aids in the development of marketing strategies, the analysis of competitors, and the preparation of strategies for maintaining a competitive edge.
In 2012, the South Africa’s Department of Energy made a presentation to the Parliamentary Portfolio Committee of Energy on the , ‘Option For LPG Expansion’ in which they highlighted that:
- The LPG Expansion option aims to provide access to safer, cleaner, efficient, portable, environmentally benign and affordable thermal fuel for all households nationally.
- Switch low income households from the use of coal, paraffin and biomass to LPG as the thermal fuel;
- Contribute to demand side management by minimizing the use of electricity on cooking and space heating; investing a fraction of the cost of a power plant in LPG switching cost could lead to a delay in the investment in new power plants.
Over the years there has been significant uptake and market for LPG gas and its necessary that you do a localised market research and analysis for your operations.
Creating A Business Plan For Your LPG Gas Business
The production and supply of LPG involves many players in the value chain, including the refineries/producers, wholesalers, distributors, dealers, retailers and end-users. It is important that you pick where you want to fall along the value chain. In this post, will most focus on the wholesalers, dealers and retailers.
Refineries or producers are typically involved at all levels of the supply value chain, from the acquisition of crude oil up to the cylinder or bottle retailing level.
The business plan includes your:
- Executive Summary
- Products and Services
- Customers and Clients
- Financial Considerations
- Competitor Analysis
- SWOT Analysis
- PESTEL Analysis
- Marketing Analysis & Trends
Starting The LPG Gas Business
If you would like to be an LPG distributor in South Africa, you will need to have the DMRE 38 wholesale license in which its application you submit through the Department of Mineral Resources and Energy after having published a notice of application in four newspapers. Distributors pay an annual license fee of R500. After granting of your license, the business need to submit annual business information to the department.
You also have to pay strict attention to your market, location and suppliers as they are core to the profitability of the LPG gas business.
Managing Safety and Security In Your LPG Business
LPG can be dangerous if handled improperly or used improperly, just like all other forms of energy. One of the main goals of the World LPG Association (WLPGA) is the promotion of safety, which is reflected in its mission statement: “As the authoritative global voice for LPG, the WLPGA promotes the use of LPG throughout the world to foster a safer, cleaner, healthier, and more prosperous world.” For more reading on the LPG Safety Guidelines for all stakeholders, you can access them here.
The hazards that are commonly associated with LPG gas are fire and explosion and the World LPG Association (WLPGA) released a short video highlighting some of the behaviours and charasteristics of the LPG under normal and abnormal conditions. (https://www.youtube.com/watch?v=9X6EG3g8JHU)
In conclusion, just like any other business, your success is ultimately determined by how well you run the business and adhere to set business principles and many other business variables. All the best as you embark on your LPG gas business.