African Refiners: Displacing Charcoal to Cost $7.5bn in Downstream Infrastructure

Emmanuel Addeh in Abuja

African Refiners and Distributors Association (ARDA) has said that  displacing charcoal with clean cooking would cost Africa about $7.5 billion for downstream infrastructure and stoves.

Stressing that the continent remains the lowest in per capita Liquefied Petroleum Gas (LPG) consumption despite huge resources, ARDA which disclosed this at an LPG Virtual Workshop, stated that Africa must take advantage of its resources for growth.

Executive Secretary of ARDA, Anibor Kragha, who spoke on the occasion, said that while Sub-Saharan Africa has 14.4 per cent of world’s population , it has less than 1 per cent of global LPG consumption. “Many countries have little or no bulk handling facilities,” Kragha said.

But he noted that LPG consumption in Africa has more than doubled since 2010, noting that the consumption recorded 9.7 per cent annual growth rate over the past decade.

While stressing that Nigeria remains largest LPG consumer, Kragha said LPG is fastest-growing petroleum product in Sub- Saharan Africa.

In his remarks, Vice President, LPG, Europe, Middle East and Africa at Argus, David Appleton said LPG remains critical to energy security in Africa, explaining that safety, pricing, culture and finance are critical to the growth of the sector in Africa.

Appleton stated that investors in the sector needed returns, adding that there must a way to de-risk investment as much as possible, while the continent must think about long term investment, as well as 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 need to improve governance and institution for Africa to attract investment.

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

“Securing favourable, diversified and long term supply contracts with established global traders is necessary,” he said, urging players in the sector to  recalibrate their capital structure before seeking financing. He noted that equity injection in the business could help lower financing cost.

In a slide by Wagl Energy Limited, stakeholders at the company noted that the potential for LPG consumption in Africa could improve if the continent is committed to solving challenges in the areas of gas production that prioritize local market, shipping and storage as well as distribution to other end users.