Africa
IN a recent development for Africa’s clean cooking landscape, the Global LPG Partnership, GLPGP, and the African Refiners & Distributors Association, ARDA, announced a $1.5 billion fund dedicated to supporting clean cooking initiatives across the continent. The fund aims to accelerate the adoption of LPG as a primary cooking fuel, addressing the urgent need to reduce the reliance on biomass, which remains prevalent across Africa. The GLPGP-ARDA fund will provide financing for infrastructure development, distribution networks and consumer education programs, facilitating broader access to LPG and promoting sustainable cooking practices.
This development comes at a time as African Energy Week, AEW,: Invest in African Energy 2024 – scheduled for November 4-8 in Cape Town – prepares to host a session titled, Towards the Elimination of Energy Poverty: LPG Value Chains for the African Clean Cooking Crusade. With approximately 900 million people in Africa still lacking access to clean cooking technologies, the session will explore how investments in LPG and distribution can catalyze energy security in Africa. The session will also provide an overview of innovative financing tools applicable to LPG markets, with insights from industry experts including Spark+ Africa Fund’s Partner and Investment Director Peter George; LPG Association of South Africa’s, LPGSA, Managing Director Gadibolae Dihlabi; and Oryx Energies’ Managing Director Pam Indurjeeth.
AEW: Invest in African Energy is the platform of choice for project operators, financiers, technology providers and government, and has emerged as the official place to sign deals in African energy.
LPG serves as a vital solution for improving access to clean, affordable and reliable energy in Africa, and recent advancements across the continent aim to bolster the penetration of LPG in domestic markets. The International Energy Agency – which declared 2024 as the year for achieving universal access to clean cooking – mobilized $2.2 billion in public and private sector funding during a summit in Paris this year. The financing supports the adoption of clean cooking solutions such as LPG and accounts for half of the continent’s financial needs to achieve universal access.
In Gabon, independent oil and gas company Perenco launched its Batanga LPG plant in December 2023, representing the second phase of its $50-million gas development project – set to produce 15,000 tons of LPG. Similarly, Kenya has positioned itself as a regional LPG hub with the inauguration of a new facility in Mombasa. Notably, LNG distributor Taifa Gas began constructing a $130-million, 30,000-metric-ton LPG storage facility in the Dongo Kundu Special Economic Zone in Mombasa last December. This facility is set to reduce East Africa’s dependency on imported LPG, ensuring a more reliable and affordable supply for households.
In North Africa, Algeria – the continent’s largest LPG producer – has advanced its LPG capabilities through a $740-million contract between national oil company Sonatrach and multinational TotalEnergies for extraction operations at the Tin Fouye-Tabankort fields. Similarly, Egypt, Africa’s third-largest LPG producer, is enhancing its infrastructure with the development of the $732-million Western Gas Complex. Scheduled to become operational later this year, this facility will significantly increase Egypt’s LPG production capacity to address the country’s growing energy needs.
In addition to energy access, progress is being made to boost capacity building across the LPG industry. Nigeria and Saudi Arabia have partnered to enhance LPG accessibility through the National Human Capacity Training Program for the Adoption of LPG. This initiative, led by Saudi Arabia’s Oil and Sustainability Program in collaboration with Nigeria’s Ministry of Petroleum Resources, focuses on developing micro-distribution points in Nigeria’s Edo State and establishing training facilities for local communities. The program aims to increase LPG availability while reducing health risks associated with burning wood or coal for cooking. This partnership is part of Nigeria’s broader strategy to reduce reliance on biomass and promote cleaner cooking solutions.
Meanwhile, financial institutions are also advancing LPG activities in Africa. Notably, the International Finance Corporation, IFC, partnered with Cameroonian energy retailer BOCOM Petroleum to enhance LPG access in rural areas, aiming to replace traditional biomass with cleaner energy alternatives and improve public health. The IFC is supporting this initiative with a €50 million financing package, which will fund the expansion of BOCOM’s main LPG storage facility and the construction of new regional distribution hubs across Cameroon. Additionally, the African Development Bank, AfDB, pledged $2 billion over the next decade to promote the adoption of clean cooking solutions. This commitment, which equates to an annual investment of $200 million, aims to achieve universal access to clean cooking by 2030. The funding will support various solutions, including LPG, gas-to-power and biogas.
“LPG stands to transform Africa’s energy sector, bringing cost-effective and reliable energy to millions of people. The continent’s reliance on biomass has not only imposed risks associated with security of energy supply but has resulted in a continent-wide health crisis. As a clean cooking fuel, LPG provides a tangible solution to mitigating these risks,” states NJ Ayuk, Executive Chairman of the African Energy Chamber.
During AEW: Invest in African Energy, the LPG session will explore the contributions of large consumers and regional markets, highlighting how LPG facilities are crucial for achieving economies of scale within the industry. Additionally, the potential of carbon credits and climate finance to drive growth in Africa’s LPG sector will be evaluated, with government policies analyzed for their role in accelerating the development of sustainable LPG ecosystems. Distributed by APO Group on behalf of African Energy Chamber.
13th September, 2024.
C.E.
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