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Despite 620tr cubic feet reserves, LPG consumption in Africa world’s lowest

By Kingsley Jeremiah, Abuja
08 May 2023   |   4:33 am
Although Africa has over 620 trillion cubic feet of natural gas reserves, the continent remains the lowest in per capita Liquefied Petroleum Gas (LPG) consumption globally.

Nigeria Liquify Natural Gas (NLNG)

Although Africa has over 620 trillion cubic feet of natural gas reserves, the continent remains the lowest in per capita Liquefied Petroleum Gas (LPG) consumption globally.

African Refiners and Distributors Association (ARDA), which disclosed this during an LPG Virtual Workshop, said displacing charcoal with modern fuels would cost Africa about $7.5 billion, distribute cleaner cooking stoves and build downstream infrastructure.

Executive Secretary of ARDA, Anibor Kragha, said while sub-Saharan Africa has 14.4 per cent of the world’s population, it has less than one per cent of the global LPG consumption.

“Many countries in Africa have little or no LPG bulk handling facilities,” Kragha said.

He, however, noted that LPG consumption in Africa has more than doubled, since 2010, saying consumption recorded 9.7 per cent yearly growth rate over the past decade.

Stressing that Nigeria remains the largest LPG consumer, Kragha noted that LPG is the fastest-growing petroleum product in sub-Saharan Africa.

Vice President, LPG, Europe, Middle East and Africa, at Argus, David Appleton, said LPG remains critical to energy security in Africa, adding that safety, pricing, finance and infrastructure development are key to growth of the sector.

Appleton said investors in the sector need returns, and there must be a way to de-risk investments as much as possible.
Noting that the continent must think about long-term investments, Appleton said there was a need for regulatory progress and consistency.

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

Dabo said lenders are more comfortable lending to organisations that are willing to establish best-in-class business practices. He added that stability and practicability of cash flow could significantly help reduce cost of financing while driving more investment into LPG.

Speaking on security of supply, Dabo said “securing favourable, diversified and long-term supply contracts with established global traders” is necessary.

Dabo also urged players in the sector to recalibrate their capital structure(s) before seeking financing, noting that equity injection into the business could help lower financing costs.

WAGL Energy Limited, a decade-long joint venture between subsidiaries of NNPC LNG Ltd and Sahara energy Resource Limited (a subsidiary of NNPC Limited), advised workshop participants that the potential for LPG consumption in Africa could be greatly improved by solving three major bottlenecks along the production value chain – gearing gas production towards local supply for LPG production, increasing the number of LPG vessels owned and managed by sub-Saharan African companies, and increasing LPG retail facilities, cylinder plants and trucking capabilities to address distribution to end users.

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