ARDA

Building an African LPG Market for Africa

Global Industry Consensus on Best-in-Class Operating Practices for the LPG Value Chain

Michael Kelly

WLPGA

April 2021

Carbon intensive energy

usage is damaging our

environment…

…potentially changing our climate…

Cities are not much better

Our homes are not much

better

Coronavirus is making

things worse!

A FUTURE OF OPPORTUNITIES (AND CHALLENGES)

AGENDA

1. The LPG industry

2. The WLPGA

3. Why LPG

4. Best practices

5. Conclusions

As we begin to emerge from the COVID-19

crisis the LPG industry continues to be

characterised by three enduring and

strengthening trends – strong production,

matched by solid demand and sustained

lower international prices.

PRODUCTION

PRODUCTION STILL GROWING

INCREASE OF MORE THAN ROBUST GROWTH FOR WITH AN ANNUAL

GROWTH RATE OF

3.7 %

GLOBAL PRODUCTION

3 3 0 MILLION TONNES SINCE THE BEGINNING OF

THE DECADE

MILLION TONNES 50

THE USA IS NOW A MAJOR PRODUCER AND THE WORLD’S

LARGEST EXPORTER

CONSUMPTION

2.7% GROWTH OF +2.4

MILLION TONNES

IN INDIA

+5% GROWTH IN ASIA

SLIGHT DECREASE IN GLOBAL

AUTOGAS CONSUMPTION

323 MILLION TONNES

WLPGA

The unique association for LPG businesses worldwide

c. 280 organisations in >125 countries

Production Shipping &

trading Storage

Distribution and retail

Service

Serving the full LPG value chain

WE ARE ACTIVE IN OVER 125 COUNTRIES WITH 285 MEMBERS

LPG’s contribution to the SDGs

COOKING FOR LIFE

25 Role Model Profiles online

>1,800 MEMBERS

17 AMBASSADORS

5 NATIONAL CHAPTERS

South Africa, Nigeria, India, Colombia, USA

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

LPG market development is beneficial

Access to clean, modern energy such as LPG can

improve a country’s GDP

LPG access improves health and economic

opportunity

It generates tax revenue for governments

It creates direct & indirect employment

It encourages capital investment

What grows demand?

1. Clear government policy

Initiatives driven by the senior leadership

Investment in infrastructure

2. Tangible benefits to end users

Improved health & increased status

3. Strong and effective industry implementation

Follow industry best practices

4. Population growth & increased income

Africa is an example

The role of government is

critical Lack of infrastructure: Need for investment - Improve the business &

regulatory environment

• Create a level playing field for all energy sources and make energy services competitive

Essential to tackle subsidies on competing fuels or other unequal tax advantages

• Tackle barriers to market entry (e.g. product import / storage facilities, equipment import duties)

• Encourage investment in distribution – stable, long term policy

• Regulate and enforce good business practices

A Credible National LPG

Association is Crucial

National LPG Associations can be an effective vehicle to

communicate common messages about the industry by

being managed in a clear unbiased manner

Are crucial in establishing a channel of communication with

the government

Act as a funnel for information on best practices, standards

and innovations from the global industry

Import Infrastructure is Essential

Africa exports and imports

Continued LPG market growth is dependent on sufficient

access to product at competitive rates – often driven by

import infrastructure

Consumption growth has been strong in the last five

years and looks poised to continue!

Importance of Good Industry Practices

Proper attention to good business practices is essential for

maintaining :

• The Customer Proposition

• Business Assets

• Reputations of Companies

• Companies Financial Responsibilities

• Competition in the Market Place

• All other Stakeholder Interests

What Good Industry Practices do…

• Create a solid common foundation on which LPG

businesses can be built and compete fairly

• Not designed to encourage a global uniform

business

• Encourages differentiation within the industry as

companies strive towards best practice

Jointly create an LPG road map

Demonstrate capacity of the LPG industry to play a meaningful

role in energy mix

Consider indigenous supply vs import + infrastructure

Regulatory role of government to be clearly defined

Agree fiscal incentives joint investments enhanced

communication

Reduce market and regulatory risks

Conclusions

Infrastructure must respond to clear commercial

opportunities

Industry MUST work with government to help increase use

of LPG

Associations are key vehicles for this

Good industry practices, particularly in nascent cylinder

markets is paramount

LPG Week 2021/Dubai

Theme : ‘Energising Tomorrow’

Physical event with hybrid element

LPG Week concept roll out in full

COVID-19 local regulations to be

implemented