The Sahara Group, an energy and infrastructure conglomerate, has said it would invest over $1billion to enhance access to Liquefied Petroleum Gas (LPG) in Nigeria and some other Africa countries and emerging economies through its subsidiary, WAGL Energy Limited.
The group explained that the move was part of the ways it wants to boost energy transition on the continent.
The Executive Director, Sahara Group, Mr. Temitope Shonubi, disclosed this in South Africa, at the African Refiners and Distribution Association (ARDA) conference 2021, where he spoke on the role of LPG in Africa’s Energy Transition.
“Sahara, through its subsidiary, WAGL Energy Limited is already working towards investing $1 billion to ramp up its LPG fleet and terminal infrastructure over the next five years. In addition to the vessel fleet, Sahara is in the process of building over 120,000 metric tonnes of LPG storage in eleven countries,” a statement quoted him to have said.
According to him, the countries earmarked for the storage tanks which include Nigeria, Senegal, Ghana, Cote d’Ivoire, Tanzania and Zambia, whose process has commenced and five others in the preliminary stage
Shonubi said Sahara continues to lead efforts geared towards seamless energy transition in Africa through innovative energy solutions via its upstream, midstream, downstream and downstream power businesses including partnerships with the United Nations Development Programme (UNDP) and other leading organisations.
He noted that Africa had become reliant on imports to meet its LPG demand as a result of low crude oil refining capacity and absence of adequate wet gas being processed
He said, “Africa’s refining capacity of 3,343,000 barrels per day is limited to just 20 countries; utilisation rates have fallen from about 75 per cent in 2010 to 55 per cent in 2020. Only six African nations have combined LPG storage capacity greater than 50,000MT.
“Economic progress is key to harnessing Africa’s latent LPG demand to boost economic performance.”
The executive director however lamented that Africa accounted for just four per cent of global LPG consumption last year.
l understands that LPG consumption in Africa is low compared to other markets. Africa’s consumption was 14MT (translating to 12 kilogram per person) in 2020, compared to Asia Pacific’s 108MT ((27kg/person), North America’s 74MT (123kg/person), Europe any Eurasia’s 49MT (49kg/person), Middle East’s 38MT (60kg/person) and Latin America’s 34 MT (53kgs/person).
Shonubi attributed the low LPG consumption in Africa to the hurdle of affordability, absence of large-scale LPG storage infrastructure, minimal vessels dedicated to the region, low set-up cost of firewood and kerosene stoves, as well as negative perceptions and fear of explosions due to poor safety standards, among other factors.
“While set-up costs may be high, LPG has higher energy efficiency when compared to kerosene and fuel wood and it has virtual zero sulphur content. LPG is key to achieving the UN SDG 7 – Sustainable Development Goal of Universal Access to Energy,” Shonubi said.
He said converting just 30 per cent of Africa’s vehicle fleet to run on LPG would result in $3 billion annual fuel-cost savings and about 40 billion in CO2 emission reductions, while indirect cost savings from health and infrastructure would exceed $15 billion annually.
On the role of African governments in encouraging LPG adoption, Shonubi canvassed for an enabling policy environment to foster adequate private sector involvement and sustainability.
He said funding should be channeled into country-wide investment programmes while megaprojects and regional integration should be accelerated in order to efficiently serve a larger population and grow the economy for multiple countries.
He also advocated growing Africa’s LPG consumption, through investments in LPG infrastructure and financing of LPG use through credit schemes, Pay-as-you-use, penalty for emissions, reward for global warming reductions and inclusion of bio LPG, among others.