FREQUENTLY ASKED QUESTIONS (FAQ) REGULATION OF LIQUEFIED PETROLEUM GAS (LPG) BY THE ENERGY REGULATOR

Transcription

1 FREQUENTLY ASKED QUESTIONS (FAQ) REGULATION OF LIQUEFIED PETROLEUM GAS (LPG) BY THE ENERGY REGULATOR FAQ: Regulation of LPG by the Energy Regulator: Amendment 1 of 05 August 2014

2 Glossary of Terms Energy Regulator Act The National Energy Regulator Act, 2004 (Act No. 40 of 2004) Gas Act The Gas Act, 2001 (Act No. 48 of 2001) LPG Liquefied Petroleum Gas Petroleum Pipelines Act The Petroleum Pipelines Act, 2003 (Act No. 60 of 2003) Petroleum Products Act The Petroleum Products Act, 1977 (Act No. 120 of 1977) Page 2 of 11

3 Regulation of LPG by the Energy Regulator Question 1 What are the Energy Regulator s roles and responsibilities? The Energy Regulator was established in terms of section 3 of the Energy Regulator Act to regulate the electricity, piped gas and petroleum pipelines industries. Question 2 In terms of which Act is LPG regulated? Different parts of the LPG value chain are regulated under different Acts - see the table below. Regulator Act Maximum Retail price Storage facilities Pipelines; and Marine loading facilities Pipelines (above 2 bar gauge) Gas liquefaction facilities; and Gas re-gasification facilities. The Energy Regulator Petroleum Pipelines Act The Energy Regulator Gas Act LPG in liquid form LPG in gaseous form Minister of Energy Petroleum Products Act (see Page 3 of 11

4 Question 3 What if my LPG facility falls under both the Gas Act and the Petroleum Pipelines Act? Before submitting any application for a licence, it is advisable to contact the Energy Regulator (NB: see contact details at the back) for advice regarding which of the two Acts is more appropriate for your LPG facility. Question 4 How do I apply for a licence? Before submitting an application for a licence to the Energy Regulator, it is advisable to first contact the Energy Regulator for a pre-licence application meeting. During this meeting you will be provided with all the necessary documents and the licence application processing steps will be fully explained to you. For more information on how to apply for a licence under the Petroleum Pipelines Act, please download a document called Petroleum Pipelines Regulations: Licensing Guidelines from the Energy Regulator website or contact the Energy Regulator. For more information on how to apply for a licence under the Gas Act, please download Rules in terms of the Gas Act (Act No. 48 of 2001) from the Energy Regulator website or contact the Energy Regulator. Page 4 of 11

5 SECTION 1 REGULATION OF LPG - PETROLEUM PIPELINES ACT Question 5 How is LPG regulated in terms of the Petroleum Pipelines Act? Petroleum product is defined in the Petroleum Pipelines Act as any liquid petroleum fuel and any lubricant, whether used or unused, and includes any other substance which will be used for a purpose for which a petroleum fuel or any lubricant may be used. [own emphasis] Liquefied Petroleum Gas ( LPG ) is a liquid petroleum fuel and is used for purposes for which other types of liquid petroleum fuels are used. LPG need not be transported by pipeline in order to fall under the Petroleum Pipelines Act. NERSA issues licences for the construction, operation and conversion of, Petroleum pipelines; Petroleum loading facilities; and Petroleum storage facilities Question 6 Which LPG facilities do not fall under the Petroleum Pipelines Act? Pipelines: o on the premises where LPG is manufactured; o on the premises of an LPG storage facility (these are licensed as part of the storage facility); o on the premises of an LPG retailer; and o on the premises of an agricultural cooperative. Page 5 of 11

6 Storage facilities: o used as an integral part of the manufacturing of LPG and that are located on the premises where the LPG is manufactured; o used to store LPG for own use; o used for the retailing of LPG to the public; o used by an agricultural cooperative exclusively for its members; and o used to transport petroleum by road, rail sea and air. Question 7 What is a bulk storage facility? Bulk is not defined in the Petroleum Pipelines Act. Any storage of LPG for commercial purposes is subject to licensing by the Energy Regulator, as determined by the Energy Regulator on a case by case basis. Question 8 What can I do if I believe that my LPG storage facility should not be classified as a bulk storage facility and therefore should not be regulated in terms of the Petroleum Pipelines Act? Only the Energy Regulator has the authority to determine if an activity requires licensing or not. In order to avoid contravening the Petroleum Pipelines Act, owners of LPG facilities must contact the Energy Regulator to find out if their facilities require licensing by the Energy Regulator. Question 9 Do petroleum storage tanks at an LPG cylinder filling facility require licensing in terms of the Petroleum Pipelines Act? Yes, if the filled cylinders are distributed to retailers for further on-selling to the public at large, even if the same facility retails a fraction of its filled cylinders to the public. Page 6 of 11

7 Question 10 Do petroleum storage tanks at a cylinder filling facility where propane and butane are mixed before filling into cylinders require licensing in terms of the Petroleum Pipelines Act? Yes, propane and butane can be used individually as LPG without being mixed. The proportion of propane and butane vary from time to time 1. This mixing is not considered to be manufacturing of a petroleum product. Such storage facilities are therefore licensable in terms of the Petroleum Pipelines Act. Question 11 Do LPG storage tanks which are used to feed a distribution pipeline network of LPG in gaseous form require licensing in terms of the Petroleum Pipelines Act? Yes, such storage tanks must be licensed. Question 12 Do LPG storage tanks, owned by an LPG supplier but located at its customer s site/factory and storing LPG in liquid form, which is owned by the customer for use in its manufacturing process, require licensing in terms of the Petroleum Pipelines Act? No. 1 SANS 1774:2007 Specifies requirements for liquefied petroleum gas mixtures intended for use as fuel. Page 7 of 11

8 Extract from the approved LPG FAQs Question 13 Do petroleum storage tanks, which are owned by an LPG supplier but located at its customer s site and storing the customer s LPG in liquid form, for use to fill cylinders and retailed to the public, require licensing in terms of the Petroleum Pipelines Act? No. Page 8 of 11

9 SECTION 2 REGULATION OF LPG - THE GAS ACT Question 14 How is LPG regulated in terms of the Gas Act? Gas is defined in the Gas Act as all hydrocarbon gases transported by pipeline [own emphasis]. LPG is one of the types of gas specifically listed in the definition. Therefore, any LPG in a gaseous state that is transported by pipeline falls under the Gas Act. The Energy Regulator issues licences for the construction and operation of, as well as conversion of infrastructure into: gas transmission facilities; gas storage facilities; gas distribution facilities; gas liquefaction facilities; and gas re-gasification facilities. The Energy Regulator also issues licences for trading in gas and may approve maximum prices for distributors, reticulators and all classes of consumers of piped gas. Certain gas activities or facilities do not require licensing but must be registered with the Energy Regulator in terms of section 28 of the Gas Act. These are: the production and importation of gas; the transmission of LPG by pipeline for personal use, must be registered with the Energy Regulator; and Small biogas projects in rural communities and not connected to the national gas pipeline grid. Page 9 of 11

10 Question 15 Which LPG activities/ facilities are exempt in terms of the Gas Act? LPG reticulation in gaseous form by pipeline and any related trading; and LPG in gaseous form supplied from a bulk storage tank or cylinder, piped at a pressure of less than 2 bar gauge and crossing no more than four erf lines between separate property boundaries. Page 10 of 11

11 CONTACT DETAILS Petroleum Pipelines Regulation Attention: Head of Department Petroleum Licensing, Compliance and Dispute Resolution Department Tel: Gas Regulation Attention: Head of Department Gas Licensing, Compliance and Dispute Resolution Department Tel: Page 11 of 11