An energy and infrastructure conglomerate, Sahara Group, has said it will invest over $1bn to enhance access to Liquefied Petroleum Gas in Africa and emerging economies in a bid to boost energy transition on the continent.
The Executive Director, Sahara Group, Temitope Shonubi, disclosed this at the African Refiners and Distribution Association conference 2021 in South Africa where he spoke on the role of LPG in Africa’s energy transition, according to a statement.
“Sahara, through its subsidiary, WAGL Energy Limited is already working towards investing $1bn 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 him, the countries earmarked for the storage tanks include Nigeria, Senegal, Ghana, Cote d’Ivoire, Tanzania and Zambia, whose process has commenced, and five others in the preliminary stage.
He said the firm continued to lead efforts geared towards 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 per cent in 2010 to 55 per cent 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.”
He lamented that Africa accounted for just four percent of global LPG consumption last year.
LPG consumption in Africa is low compared to other markets. Africa’s consumption was 14MT (translating to 12 kilogram per person) in 2020, compared to Asia Pacific’s108MT ((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.