South Africa’s liquefied petroleum gas (LPG) market should move toward deregulation through measures to spur competition, an Antitrust Commission recommended after a two-year inquiry into the industry. “There are structural impediments to competition that may hinder the growth of the LPG industry,” the country’s Competition Commission said, Bloomberg reported.
According to the recommendations, there are significant bottlenecks in the regulatory environment which restrict the ability of potential competitors. South Africa manufactures about 300,000 tons of LPG a year, generating sales of about $98m, the commission estimated when it began the probe in 2014, IOL wrote.
The commission found that companies maintain some long-term supply agreements and it have been renewed with the same wholesaler for more than 25 years. However, it proposes to shorten contracts, cancel automatic renewals and introduce an allocation mechanism where all wholesalers would bid for LPG volumes.The commission also recommended allocating a minimum percentage of volumes to small wholesalers.