Energy Transition: Sahara Group to inject $1 billion into LPG Vessels, Infrastructure in Africa

Thursday, October 14, 2021 / 03:20 PM / Release by Sahara Group / Header Image Credit: Sahara Group

Leadingenergy and infrastructure conglomerate, Sahara Group, will invest over1billion USD to enhance access to Liquefied Petroleum Gas (LPG) in Africa andemerging economies in a bid to boost energy transition on the continent.

TemitopeShonubi, Executive Director, Sahara Group disclosed this at the African Refinersand Distribution Association (ARDA) conference 2021 in South Africa where hespoke on the role of LPG in Africa's energy transition.

"Sahara,through its subsidiary, WAGL Energy Limited is already working towardsinvesting $1 billion to ramp up its LPG fleet and terminal infrastructure overthe next five years. In addition to the vessel fleet, Sahara is in the processof building over 120,000 metric tonnes of LPG storage in eleven countries", he said.

Accordingto him, the countries earmarked for the storage tanks which include Nigeria,Senegal, Ghana, Cote d'Ivoire, Tanzania and Zambia whose process hascommenced and five others in the preliminary stage

Saharacontinues to lead efforts geared towards seamless energy transition in Africathrough innovative energy solutions via its upstream, midstream, downstream power businesses including partnerships with the United NationsDevelopment Programme and other leading organisations.

Shonubinoted that Africa had become reliant on imports to meet its LPG demand as aresult of low crude oil refining capacity and absence of adequate wet gas beingprocessed

He said, "Africa'srefining capacity of 3,343,000 barrels per day is limited to just 20 countries;utilisation rates have fallen from about 75 percent in 2010 to 55 percent in2020. Only six African nations have combined LPG storage capacity greater than50,000MT."

"Economicprogress is key to harnessing Africa's latent LPG demand to boost economicperformance."

Helamented that Africa accounted for just four percent of global LPG consumptionlast year.

LPGconsumption in Africa is low compared to other markets. Africa's consumptionwas 14MT (translating to 12 kilogram per person) in 2020, compared to AsiaPacific's108MT ((27kg/person), North America's 74MT (123kg/person), Europe& Eurasia's 49MT (49kg/person), Middle East's 38MT (60kg/person) and LatinAmerica's 34 MT (53kgs/person).

Shonubiattributed the low LPG consumption in Africa to the hurdle of affordability,absence of large-scale LPG storage infrastructure, minimal vessels dedicated tothe region, low set-up cost of firewood and kerosene stoves, as well asnegative perceptions and fear of explosions due to poor safety standards, amongother factors.

"Whileset-up costs may be high, LPG has higher energy efficiency when compared tokerosene and fuel wood and it has virtual zero sulphur content. LPG is key toachieving the UN SDG 7 - Sustainable Development Goal of Universal Access toEnergy", Shonubi said.

He said convertingjust 30 percent of Africa's vehicle fleet to run on LPG would result in $3bnannual fuel-cost savings and about 40 billion in CO2 emission reductions, whileindirect cost savings from health and infrastructure would exceed $15bnannually.

On therole of African governments in encouraging LPG adoption, Shonubi canvassed anenabling policy environment to foster adequate private sector involvement andsustainability.

He saidfunding should be channeled into country-wide investment programmes whilemegaprojects and regional integration should be accelerated in order toefficiently serve a larger population and grow the economy for multiplecountries.

He alsoadvocated growing Africa's LPG consumption, through investments in LPGinfrastructure and financing of LPG use through credit schemes, Pay-as-you-use,penalty for emissions, reward for global warming reductions, inclusion ofbio LPG among others. He was very emphatic about protecting the environmenttoday for a safer and more environmental friendly tomorrow.

Heconcluded that although there is a myth that cooking with firewood churns outmore nutritious meals than cooking with gas, most of such comparisonremained in the mind as there are now seasoning variants that make meals tastethe same.