Sahara Group to invest US$1b in LPG to boost African energy transition

AFRICAEnergy and infrastructure conglomerate, Sahara Group, plans to invest over US$1 billion to enhance access to liquefied petroleum gas (LPG) in Africa and emerging economies in a bid to boost the energy transition on the continent.

Executive director of the Sahara Group, Temitope Shonubi, disclosed this at the African Refiners and Distribution Association (ARDA) conference 2021 in South Africa 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 US$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 11 countries,” he said.

According to Shonubi, the countries earmarked for the storage tanks include Nigeria, Senegal, GhanaCote d’Ivoire, Tanzania and Zambia whose process has commenced and five others in the preliminary stage.

Sahara continues to lead efforts geared towards a seamless energy transition in Africa through innovative energy solutions via its upstream, midstream, downstream and power businesses including partnerships with the United Nations Development Programme and other leading organisations.

Shonubi noted that Africa had become reliant on imports to meet its LPG demand as a result of low crude oil refining capacity and the 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% in 2010 to 55% 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.” 

LPG consumption must be increased for a successful energy transition

Shonubi lamented that Africa accounted for just 4% of global LPG consumption in 2021, further explaining that LPG consumption in Africa is low compared to other markets.

Africa’s consumption was 14MT in 2020 (translating to 12kg per person), compared to Asia Pacific’s 108MT (27kg/person), North America’s 74MT (123kg/person), Europe & 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 fuelwood and it has virtually 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% of Africa’s vehicle fleet to run on LPG would result in US$3 billion annual fuel-cost savings and about US$40 billion in CO2 emission reductions, while indirect cost savings from health and infrastructure would exceed US$15 billion annually. 

Governments have a role to play in LPG adoption

On the role of African governments in encouraging LPG adoption, Shonubi canvassed an enabling policy environment to foster adequate private sector involvement and sustainability

He said funding should be channelled into country-wide investment programmes while megaprojects and regional integration should be accelerated to efficiently serve a larger population and grow the economy for multiple countries.

Investing in LPG for a just energy transition

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, the reward for global warming reductions, the inclusion of bio-LPG among others. He was very emphatic about protecting the environment today for a safer and more environmentally friendly tomorrow.

Shonubi concluded that the idea that cooking with firewood churns out more nutritious meals than cooking with gas is merely a myth, and most of such a comparison remained in the mind.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals, and insights from Africa’s business, economy, and more. SUBSCRIBE HERE

 

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.