Fixes for the future | A new approach to LPG

Whether it’s down to climate change, COVID-19 or simply a desire to change the way we live, 2020 has seen new introspection, a renewed focus on our effect on the planet. Sustainability and carbon impact have gone from nebulous ideas to something we can weave into everyday life. The economic realities of our country, laid bare by the pandemic, have given us pause for thought. While we can each play our part at home and at work, a handful of local companies are bringing innovative tech solutions to solving the problems of today and tomorrow. 

From left to right: Chef Lungelo, PayGas brand ambassador; Natalia Guida Giampettri, Co- founder of PayGas & Philippe Hoeblich, Founder and CEO of PayGas

A new approach to LPG

Winter in the townships of the Western Cape is a dangerous time, with the ever-present threat of coal and paraffin stoves sparking runaway fires. While these fuels may be cheap and readily available, they’re also dangerous. Those in low-income areas often have little choice when it comes to cooking and heating. 

Providing a safe and affordable alternative is one of the goals of PayGas, an innovative new business that brings the pay-as-you-go concept to liquefied petroleum gas (LPG). “Many people in low-income households are cooking with wood, charcoal or paraffin because they can purchase them in small amounts when they have some income,” explains Philippe Hoeblich, founder and chief executive officer of PayGas. “They don’t buy gas because they normally have to pay for a full cylinder each time.”

PayGas aims to change that by setting up a network of gas refilling stations in low-income areas across the Cape and, later, the country. The PayGas concept is simple: clients will be able to take their cylinder to a neighbourhood refilling station and purchase as much gas as their budget allows. Refills can be for as little as R10, enabling daily workers to purchase gas in small quantities according to their income. A further element of the PayGas innovation is that the system is entirely cashless, using Flash vouchers – to cater for the large unbanked market – and a mobile app to link client and refilling station.

PayGas launched its pilot project in Delft in 2019 and within a year it serviced 1 000 clients, selling 16 tons of gas across 4 000 transactions. Almost three-quarters of the clients used the service more than once and nearly half filled less than a full cylinder at a time. 

“All this is an entirely new market for gas,” says Philippe. “These are people who were previously using charcoal, paraffin or electricity.” 

It’s an untapped market for the major gas companies, which have been quick to support the scheme. While PayGas benefits residents with affordable and convenient access to a cheap and safe energy source, pay-as-you-go gas refills from neighbourhood filling sites are good for large producers, too, enabling them to save on transport costs and reduce the long supply chain of pre-filled cylinders that stretches from user to retailer to refinery.

PayGas now aims to open a further 50 new filling stations over the next three years. Working in partnership with Pick n Pay’s spaza shop roll-out, the company is set to open at least 11 refilling stations in the course of 2020, including points in both Kayamandi and Mbekweni.

While the partnership with Pick n Pay offers a quick route to market, as zoning and planning permissions are already in place, PayGas also hopes to stimulate township entrepreneurs by operating a franchising model that focuses on local empowerment. “We believe in economic inclusion, especially in the township areas,” explains Philippe. “Wherever possible, we want the refilling station to be operated by someone from that community.”