African oil producing countries require $7.5 billion to scale up LPG uptake

NAIROBI, Kenya - The African Refiners and Distributors Association has revealed that Nigeria and other oil-producing nations in Africa will require $ 7.5 billion to scale up LPG uptake among African households.

This is in a bid to displace charcoal with clean cooking gas, also known as Liquefied Petroleum Gas.

Anibor Kragha, Executive Secretary, ARDA, disclosed this during an LPG virtual workshop by the group, stating that while sub-Saharan Africa had 14.4 percent of the world’s population, it had less than one percent of global LPG consumption.

“Many countries have little or no bulk handling facilities,” Kragha stated.

The lobby association also stated that the continent remained the lowest in per capita consumption despite its huge abundance of gas, stressing that it was high time stakeholders came up with financial strategies and solutions to address the bottlenecks to clean cooking gas usage on the continent.

Kragha further alluded that LPG consumption in Africa had more than doubled since 2010, noting that the consumption recorded a 9.7 percent annual growth rate over the past decade.

Nigeria remained the largest LPG consumer, adding that LPG was the fastest-growing petroleum product in sub-Saharan Africa.

The Vice President, of LPG, Europe, Middle East, and Africa at Argus, David Appleton, said cooking gas was critical to energy security in Africa.

He noted that safety, pricing, culture, and finance were critical to the growth of the sector in Africa, stressing further that infrastructure development remained a key issue.

Appleton said investors in the sector would definitely expect returns on investments, adding that there must be a way to de-risked investments as much as possible.

He said Africa must think about long-term investments and that there was a need for regulatory progress and consistency.

The Senior Associate, Investments, African Finance Corporation, Moussa Dabo, who disclosed at the event that the firm had invested $10.5bn across 36 countries in Africa, said there was a need to improve governance and institutions for Africa to attract investments.

Dabo noted that lenders were more comfortable lending to organizations that were willing to establish best-in-class business practices.
According to him, stability and practicability of cash flow could significantly help reduce the cost of financing, while driving more investment into LPG.

“Securing favorable, diversified, and long-term supply contracts with established global traders is necessary and players in the sector should recalibrate their capital structure before seeking financing,” Debo stated, as he explained that equity injection in the business could help lower financing costs.

Also, in a presentation by Wagl Energy Limited, stakeholders at the company noted that the potential for LPG consumption in Africa could improve if the continent was committed to solving challenges in the areas of gas production that prioritized local market, shipping, storage as well as distribution to other end-users.

GAROWE ONLINE