Cooking For Life

The Future of LPG Demand in Africa

Michael Kelly, Deputy Managing Director, WLPGA
Maputo, July 2017
Agenda – Part Two

12.45 – 14.00 Lunch

Part Two – Cooking For Life
14.00 – 14.30 Introduction to WLPGA Cooking For Life programme

14.30 – 15.00 The Proposition for LPG

15.00- 15.30 Breaking down the entry barriers to LPG

15.30 – 15.45 Coffee break

15.45 – 16.15 Lessons from Other Countries

16.15 – 16.45 Panel Discussion on the Opportunities & Challenges for

Mozambique
16.45 – 17.00 Summary, Conclusions and Future Action
Overview of Part Two – C4L workshop

This session will build on the morning’s discussions to

explore what are the key policy challenges to growing
the LPG industry in Mozambique and how these can
best be addressed using examples from other
countries
Objectives of Part Two – C4L workshop

• Underscore the benefits of switching to LPG from

traditional fuels
• Inform stakeholders about Cooking For Life and
some of the global initiatives that have been
successful, and could conceivably be replicated, in
Mozambique
• Secure common agreement with all key
stakeholders to develop action plans and a
timetable to implement a series of improvements
Energy poverty is a reality
for billions every day
Our cities are becoming
unbearable due to outdoor
pollution
Our homes are not
much better
 Optimism
“hopefulness and confidence
about the future”
Agenda

• The WLPGA

• Cooking For Life

• LPG Industry Overview

• Future demand in Africa

• Conclusions
Who Are We?

Member companies Countries

Serving the full LPG value chain

Shipping & Distribution
Production Storage Service
trading and retail
A Powerful Industry Association
Leveraging International Organizations
Women in LPG (WINLPG)

“Most LPG consumers are women. Many women make and

manage the purchasing decision and it is largely women who
use the product. Within the industry itself there are few
women, not only at executive level, but at all levels
Energia, WLPGA Industry Council, October 2014
National Industry Associations

national / regional associations

Spending annually

Many are facing the same issues...

What you get back
• Unique access to the network including the associations
• Access to member stakeholders e.g. OEM’s (vehicle and other)
• Access to privileged, member-only data
• Possibility to leverage WLPGA research in your studies
• Consistent communications e.g. Exceptional Energy
• Direct in-country support e.g. participation at Parliamentary
briefings etc.
• Support to annual event
• Etc.
Agenda

• The WLPGA

• Cooking For Life

• LPG Industry Overview

• Future demand in Africa

• Conclusions
Cooking for Life: The Vision

COOKING FOR LIFE, a campaign of the WLPGA, aims

to facilitate the transition of

people
from cooking with traditional fuels as well as other
dirty and dangerous fuels to cleaner-burning LPG by
2030.
Cooking For Life: The Problem
Health Impacts

4.3 million people die

prematurely every year
from exposure to
indoor air pollution

Indoor Air Pollution from cooking kills more than

Malaria, HIV and TB combined
19
Cooking For Life: The Problem
Environmental Impacts:
• Cooking with LPG instead of wood combats Climate Change and
deforestation
• Switching from harvested wood to LPG reduces net carbon
emissions by 67%
• LPG produces virtually no black carbon (BC) or soot (particulate
matter, PM)
• The introduction of LPG into a community almost always has a
positive impact on the quality of life for women

20
Why LPG?
• Portable
• Bottles can be can be stored
indefinitely
• Easily transported
• Minimal investment in
infrastructure
• Used virtually anywhere -- from
urban centres to remote regions
• Flexibility in applications

When and where costly, grid-based energy services are

unavailable
Cooking For Life: The Target
20 countries
represent 2.3
billion people who
lack access to
modern fuels

Cooking for Life

will be active in
countries that
have populations
in need,
supporting
governments and
WLPGA members

Source: http://www-wds.worldbank.org
India
 Population 1.2 billion
 GDP $ 2.6 Trillion
 Economic growth 7% pa

Among the world top 5 LPG users

Consuming 20 million MT annually
Increase of 6% from 2014
Consumption grown from 15 million MT in 2012
Produces just over 10 MT
 India
India has the highest domestic LPG consumption among the countries in
which WLPGA does advocacy , and second largest in the world

Residential / Commercial Demand for LPG

Uganda
Mozambique
Kenya
Tanzania 2030
Nigeria 2016
Colombia
Myanmar
2013
South Africa
Bangladesh
Peru
Indonesia
India

0 5 10 15 20 25 30
Millions of metric tons of LPG
Source IHS
 India

 Four million cylinders are delivered daily Year Demand Projections (MMT)

 50% + total demand imported

2016-17 21.2
 Demand estimated to increase to 2017-18 23.9
38.8MMT by 2021 2018-19 26
2019-20 28
2020-21 30
2021-22 31.8
Indian LPG consumption
19,132 2022-23 32.8
20,000
18,019
18,000
2023-24 33.6
16,366
16,000 15,069 15,369 2024-25 34.5
14,041
14,000 12,526 2025-26 35.3
Consumption 000t

11,778
12,000 11,000
2026-27 36.2
10,000
2027-28 37.1
8,000
2028-29 38
6,000
2029-30 38.8
4,000

2,000

0
2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
India – What Worked
What worked:
• Strong support from the highest levels of government
• Three innovative programmes
– PaHal cash transfer programme.
– Pradhan Mantri Ujjwala Yojana (PMUY)
– Give It Up! Campaign launched in April 2015
• Coordinated execution by national PSUs
India - PaHal
 Direct Benefit Transfer for LPG (DBTL)
 Consumers get cylinders at market price and receive subsidy
directly into their bank accounts
 Launched November 2014
 176 million joined the programme
 Over 420 INR (6.5 billion USD) transferred directly to consumers
 Commercial sales increased by 39.3% April 2015 – March 2016
India - Ujjwala
.
 Launched May 2016
 Goal to provide 50 million LPG connections to BPL
families over three years
 Against initial target of 15 million connections,
already achieved 16 million in nine months
 Increased coverage to 72% may reach 85% by 2019
 Women of BPL families are given a free connection
then purchase the stove and refill

•
Indonesia
• Population 250 million
• Kerosene to LPG substitution programme
• Converted 50 million households across 396 cities
• Saving government $14.6 billion in subsidies
Indonesian LPG Consumption

6400
6066

5080 4979
Conumption 000t

4422
4263

1500 1583
1245

2007 2008 2009 2010 2011 2012 2013 2014 2015

Year
Indonesia
What Worked:
• Strong support for programme from senior government
officials
• Large amounts of investment in infrastructure
• Innovative programmes:
– Small 3kg cylinders
– Kits of cylinders, stoves and regulators given away
– Very strong end user training programmes
Brazil

LPG is the energy of choice for 95% of Brazilian

homes

33 million cylinders are delivered per month,

door to door

Government subsidized LPG in initial stages as

a “social fuel”

Industry largely deregulated and dynamic

 Ghana
 Population 25.9 million
 2015 consumption 280,000 MT (16% increase on 2014)
 Per capita consumption 9.45, kg

 Potential LPG household cooking market size could double within 5

years as a result of national initiatives, and could continue to grow by
about 20% every 5 years thereafter.
 The projected increase would mean that about 16 million Ghanaian
people (approximately 40% of all households) could be using LPG by
2030.
 LPG market growth will require major improvements to the existing
LPG supply chain, including storage capacity, filling, distribution and
retailing, and the number of safe cylinders in circulation.
Source GLPGP
Nigeria
 Population of 173 million
 Consumption 400,000 MT in 2015 (33% increase on 2014)
 Over 40% of domestic consumption in 2015 was imported
 Very low Per capita consumption of less than 2.5kg
 Production been steadily increasing - 2,405,000 MT but largely exported

 Expects that with Government intervention with regards to policies which would aid
investment and current initiatives, Nigeria should be consuming about 5 million MT
by 2026 (10 year forecast) with LPG as the major fuel for cooking
 Do not expect that the Government intervention would come very fast but
gradually with regards to policies that would aid investment despite the ongoing
huge investments by sector Stakeholders

 Committee on the Expansion of Domestic LPG in Nigeria headed by the Vice

President plans to convert 4 million households within 2 years, 10 million
households over 5 years, 21 million households over 15 years
 Bangladesh
 Population of 168 million, 34 million households
 Consumption grown from 50,000 MT in 2005 to 140,000 MT in 2015
 A 37% increase 2014-2015 figures
 Production 17,000 MT in 2015
 Domestic is 67%

 Predicting 1 million MT by 2020 domestic and transport

 Constraints: Lack of infrastructure and limited draft for vessels
 WLPGA event drew over 2,000 in March
Bangladesh

Source Laugfs
Agenda

• The WLPGA

• Cooking For Life

• LPG Industry Overview

• Future demand in Africa

• Conclusions
Iranian export potential
bringing more Arabian Gulf LPG
to Asia…
Panama Canal expansion brings
US Gulf LPG to Asia…
 The LPG industry continues to be
characterised by three enduring and
strengthening trends – strong
production, matched by solid
demand and sustained lower
international prices.
Three trends

• Global production reached

over 292mt/yr in 2015, a
4% rise from 2014
• Global consumption grew
by 3.7 % to over 284 mt/yr
• Prices remain historically
low but this could change…
What grows demand?
1. Clear government policy
Initiatives driven by the senior leadership
Investment in needed infrastructure

2. Tangible benefits to end users

Saved money and time
Improved health & increased status

3. Strong and effective industry implementation

Provide safe, dependable energy source
Follow industry best practices

4. Population growth & increased income

Asia and Africa are critical
The critical role of government

“Appropriate laws and regulations, adequately enforced, are the

single most critical factor in whether widespread access to, and
use of, LPG by a country’s households and businesses can be
achieved in the near and medium term and sustained for the long
term.”
WLPGA Guidelines for the Development of Sustainable LPG Markets
Where will future demand
come from?
Agenda

• The WLPGA

• Cooking For Life

• LPG Industry Overview

• Future demand in Africa

• Conclusions
Where is future demand?
Africa
• African GDP growing by c. 5% since
economic crisis
• Up by a factor of 6 by 2050

• Population to exceed that of China by 2025

and greater than China EU and USA by
2050
• GDP per capita expected to double by 2050

• Grid-based energy will not keep up

• Ingredients for LPG growth

 LPG consumption in Africa
Average 55 kg/cap/yr
47
65
54 60 51
• 4.2% growth per year since 2003
• 11kg per capita per year average
consumption in Africa
• The demand is concentrated on the
Northern border of the Mediterranean sea
(55kg/cap/y) compared with Sub-Saharan
(2.3kg/cap/y)
• But growth is not even by country or by
end-use
Average 2.3 kg/cap/yr

Copyright © WLPGA 2015. All rights reserved

Africa is dominated by domestic demand

African LPG consumption by sector 2014 Global LPG consumption by sector 2014

87.6% 45.5% 1.6%

11.4%

9.7%
25.1%
1.4%
5.8%
4.3% 6.7%
0.2%
0.6%

Domestic Agricultural Domestic Agricultural

Industrial Transport Industrial Transport
Refining Chemical Refining Chemical

Copyright © WLPGA 2015. All rights reserved

And penetration is uneven

Nigeria and South Africa stand out

Where is Mozambique?

Copyright © WLPGA 2015. All rights reserved

 African Demand Projection
Actual 2007 … Actual 2010 … Actual 2013 … Actual 2016 … Projection 2020 … … Projection 2030

Kenya 74,017 63,779 59,626 197,649 288,780 402,936 +570%

Tanzania 8,019 21,484 33,250 52,737 99,735 321,852
+860%
Uganda 7,273 7,838 10,345 13,836 32,376 104,481
+900%
Zambia 2,071 1,139 2,736 4,112 9,622 42,385
+1,400%
Rwanda 1,500 2,850 4,300 9,660 40,777
+1,300%
Côte d’Ivoire 101,862 129,127 170,941 268,903 342,418 468,454
+174%
Senegal 120,656 114,419 103,207 122,450 132,544 161,570
+56%
Benin 9,428 11,785 14,350 15,565 19,820 63,962
+345%
Burkina Faso 20,168 28,865 51,269 74,537 130,366 189,104
+268%
Togo 2,879 4,164 10,132 14,352 21,103 37,565
+270%
Source Oryx Energies

What is the potential for Mozambique?

 How can we help Mozambique?

• Industry is growing strongly but still

concentrated in Maputo
• Most consumption is domestic,
primarily for cooking
• Poised for strong growth in the coming
years
• Business model needs to be refined

There is plenty of opportunity for

growth – WLPGA can help!
 Case Study - Hopetoun
Hopetoun is a fast-developing country in South East Asia with a population of around 100m.

Most of the population of Hopetoun has relied on traditional fuels, such as wood and charcoal, as
their primary cooking fuel but the government wants to introduce LPG into the sector.

They have an ambitious plan to transition half the population away from traditional fuels over a
six-year period to combat the issue of deforestation in the country.

Recent market research confirms that the disposable income of their target audience for this
campaign is limited and the government is concerned that they will not be able to afford LPG
without some form of subsidy programme.

The government do not have a budget for supporting this programme and have called a meeting
with the LPG Association to discuss a way forward.
____________________________________________________________________________

Discuss how LPG might be introduced into Hopetoun to meet the

governments objectives
Want to know more about LPG
opportunities?

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