Quick and Efficient Gas Business Plan — The Business and the Regulated Price
How the maximum refill price is set by zone, what R42.00 a kilogram in the Johannesburg zone means, and why price is not a lever.
The Business and the Regulated Price
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. The Business and the Regulated Price
- 3. Licensing, Safety and Compliance
- 4. Market and Customers
- 5. SWOT and Competitive Position
- 6. Operations
- 7. Financial Plan
- 8. Break-Even and Debt Service
- 9. Investment Analysis
- 10. Sensitivity and Scenario Analysis
- 11. The Margin Squeeze
- 12. Risk Analysis
- 13. Implementation Roadmap
- 14. Key Performance Indicators
- 15. Key Assumptions
- 16. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Volume, Price and Cost Schedules
- C. Appendix C: Funding, Debt and Working Capital Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 2.1 What the shop sells
- 2.2 How the regulated price is built
- 2.3 Location requirements
2.1 What the shop sells
|
Line |
Basis |
Role |
|---|---|---|
|
LPG cylinder refills |
Capped at R42.00/kg |
83% of revenue; the reason customers come |
|
Cylinder sales |
Unregulated |
New 9, 14, 19 and 48 kg cylinders at 22% margin |
|
Gas appliances |
Unregulated |
Heaters, hobs, braais; seasonal, 32% margin |
|
Regulators, hoses, fittings |
Unregulated |
High margin, low value, high attachment rate |
|
Installation and CoC work |
Unregulated |
Requires a SAQCC-registered practitioner; 56% margin |
|
Cylinder revalidation |
Unregulated |
Cylinders must be retested roughly every 10 years |
|
Delivery |
Unregulated |
Fee-based; builds the small-business account base |
|
Year 5 |
LPG (regulated) |
Accessories (unregulated) |
Total |
|---|---|---|---|
|
Revenue, R |
12 964 736 |
3 821 116 |
16 785 851 |
|
Share of revenue |
77.2% |
22.8% |
100.0% |
|
Gross profit, R |
3 208 660 |
1 273 860 |
4 482 520 |
|
Share of gross profit |
71.6% |
28.4% |
100.0% |
|
Gross margin |
24.7% |
33.3% |
26.7% |
2.2 How the regulated price is built
Understanding the price mechanism is not academic. It tells you exactly where your margin comes from, and what can take it away.
▪ The maximum refinery gate price is calculated monthly by CEF from the basic fuels price of 93 octane lead replacement petrol, converted to a rand-per-metric-ton basis at a density factor of 0.75 and reduced by R74.00 a ton. It applies to all refineries, with an inland transport differential added for inland supply points, and it becomes effective on the first Wednesday of each month.
▪ Wholesale, transport and storage margins are added as the product moves from the refinery or import terminal to a filling depot.
▪ The maximum retail price is gazetted by magisterial district zone and takes effect on the first Wednesday of each month.
|
Element |
Per kilogram |
Who controls it |
|---|---|---|
|
Maximum refinery gate price, inland |
R16.11 |
Regulated; calculated monthly by CEF from the basic fuels price of 93 octane petrol, converted at a density factor of 0.75 and reduced by R74.00 a metric ton |
|
Wholesale, transport and storage |
R14.69 |
Bulk haulage, depot handling and wholesaler margin, including the inland transport differential |
|
Filling, handling and retail margin |
R11.20 |
What the shop earns before losses and costs |
|
Maximum retail price, Zone 9B |
R42.00 |
Gazetted monthly by the DMPR, effective the first Wednesday of each month |
|
Zone |
Maximum price, 9 kg cylinder |
Per kilogram |
|---|---|---|
|
Zone 1A — Cape Town and Durban |
R365.85 |
R40.65 |
|
Zone 9B — Johannesburg |
R378.00 |
R42.00 |
|
Zone 8B — Bloemfontein |
R379.35 |
R42.15 |
A further distinction matters when reading gazette figures. The maximum refinery gate price applicable to inland supply was R16 114.33 a metric ton for the period 1 July to 4 August 2026, while LPG imported through the Port of Saldanha Bay carried a separate figure of R18 370.34 a metric ton and a maximum retail price of R40.84 a kilogram. A Johannesburg shop is priced off the inland structure, not the Saldanha one, and the two should not be read interchangeably.
2.3 Location requirements
|
Requirement |
Specification |
Why |
|---|---|---|
|
Site area |
About 320 m² |
Vessel, filling bay, separation distances, shop and customer parking |
|
Zoning |
Consent use for hazardous substance storage |
Without it the filling licence cannot be issued |
|
Separation distances |
Per SANS 10087 |
Minimum distances from boundaries, windows, doors, drains and electrical points |
|
Vehicle access |
Bulk tanker access and turning circle |
A tanker must reach the vessel fill point safely |
|
Passing traffic |
High-visibility arterial or township high street |
Gas is a distress and convenience purchase |
|
Catchment |
Dense residential within 5 km |
The 9 kg household cylinder is the volume driver |
|
Lease term |
Minimum 5 years with renewal |
R2 691 000 of fixed installation on a leased site |
The zoning and separation requirements narrow the search dramatically. Many otherwise attractive retail sites cannot accommodate a bulk vessel at the required separation distances, and a site that fails on zoning cannot be rescued by anything else in this plan. Confirming consent use in principle should precede lease negotiation, not follow it.