Fractional gas top-ups a boon for poor

15 July 2020 | Web Article Number: ME202019712

SMME Development & Support
Social Development

AFROX, one of South Africa’s leading suppliers of liquefied petroleum gas (LPG), has signed a supply agreement with PayGas to offer easier, flexible access to clean gas for low-income households that cannot always afford a full cylinder.

LPG has numerous domestic applications including heating and cooking, making it versatile and useful in all major sectors of the South African economy. Launched in 2018, PayGas developed a proprietary technology that fractions gas purchases into smaller quantities, making the purchase process more flexible and affordable to low-income households in South Africa.

The technology is powered by a pay-as-you-go USSD software payment platform combined with a cashless refilling station and mobile app, connected to a barcode on customers' cylinders. PayGas users can purchase a prepaid voucher via their cell phone at any spaza shop or the closest Pay as you Gas station, and use the PayGas app to fill their Afrox Safety Gas cylinder, totally or partially, for as little as R10, at a Pay as you Gas station.

Fractional gas top-ups a boon for poor

Gerhard van Wyk, Business Manager LPgas for Afrox, said the company had identified a wide scope for growth in the informal and domestic LPG market in South Africa, and that PayGas’ vision, mission and values align with Afrox’s goal to offer sustainable energy solutions that foster greater choice and responsible energy consumption.

While many households in South Africa have electricity, wood and paraffin is extensively used for cooking and heating due to power shortages and the increasing cost of electricity.

Although LPG is much safer than wood and paraffin, and by far the cleanest, most sustainable option available, wood and paraffin can be purchased in small quantities, whereas traditional LPG consumption imposes the purchase of a full cylinder of gas every time the cylinder is empty, preventing households with irregular income to afford gas for cooking.

Oftentimes, low income households cannot afford to swap an empty cylinder for a full sealed one before their next pay, forcing thousands of individuals across the country to revert to alternative sources such as paraffin, charcoal, wood or expensive grid electricity.

However, with Pay-as-you-Gas, customers can purchase smaller amounts of gas, which could encourage low income households to switch to clean, affordable energy. Positioned to offer communities easy access to LPG, customers can go to their nearest Pay as you Gas station in their neighbourhood and use their cell phones to buy as much as they can afford with cashless payment.

PayGas has already rolled out a pilot Pay-as-you-Gas station in Delft, Cape Town, servicing more than 4 000 low-income residents in the township.

“With Afrox’s LPG supply, support and expertise, we can now execute on an ambitious plan to roll out several Pay-as-you-Gas stations catering to close to 200 000 customers across major townships in South Africa in the next 36 months,” said Philippe Hoeblich, Founder and CEO at PayGas.

“I founded PayGas in response to a gaping need for flexible affordable cooking energy for lower income households in urban areas in South Africa and we can't wait to execute on our ambitious plans to cater to more households in more cities in the country.”

Together with Afrox and through a micro-franchising with Pick n Pay Market Stores owners, PayGas plans to roll out five new Pay-as-you-Gas stations within the next six weeks, including Philippi Village, Gugulethu, Nyanga, Langa and Kayamandi. PayGas will also roll out three additional stations in Johannesburg, and two in Durban during 2021.

Afrox will install LPG dumpy tank storage vessels at each Pay-as-you-Gas station, shaped in a unique ready-to-use container developed by PayGas, and supply each station with approximately 2 500 cylinders to ensure sufficient cylinder stock. Afrox’s lighter and more portable 5kg Safety Gas cylinders were specifically chosen for this market where residents often have to carry cylinders from gas depots to their homes.

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