4. PayGas
Over the past 3 decades, South Africans have shifted massively towards electricity as their main source of energy for cooking, heating and lighting. Between 1994 and 2020, the proportion of households with access to electricity has risen from 57% to 84%.
However, over the last few years, electricity has become far more expensive, forcing many households to limit their usage of electricity. In addition, the country’s national electricity utility ESKOM, which provides almost all of the country’s electricity, has suffered from years of mismanagement and underinvestment, leading to ever more frequent blackouts (known as load-shedding in South Africa). In addition, South Africa’s electricity production is heavily coal-based, significantly contributing to the country’s carbon footprint. These factors have made alternative and cleaner sources of energy, such as liquid petroleum gas (LPG) for cooking and heating much more attractive. A small but rising minority of households (around 4% in 2022) are now using LPG as their source of energy for cooking and heating.
PayGas, founded by Philippe Hoeblich, is an energy tech start-up that distributes liquid petroleum gas (LPG) at retail level. It uses a model through which people can purchase bespoke amounts of gas in refillable bottles, allowing customers to purchase quantities in line with their household budgets and within their ability to pay. PayGas operates a network of cashless refilling stations in various locations across South Africa, including in the Western Cape and Gauteng provinces. It has partnered with South African retail chain Shoprite, ensuring a potential footprint across hundreds of outlets around the country. As PayGas claims, LPG is comparatively clean, emitting approximately 20% less CO2 than heating oil and 50% less than coal.
Today, the most common distribution model for LPG is to exchange of a full gas container against an empty one. To ensure availability and stock management, this model mobilises 4 gas bottles for 1 customer. PayGas’ value proposition simplifies the logistics before reaching the last mile and reduces the ratio to 1 gas bottle per user.
PayGas participates in the creation of small businesses, including women-led businesses, licensing township entrepreneurs to operate independent “Pay as you gas” stations and sharing in the sales margins. It is now replicating the model in other markets, including in Nigeria, Brazil and Bangladesh.
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