A Review of the Nigerian Energy Industry

Kenyans have responsibility in arresting illegal LPG trade

power transmission grid02 January 2014, Nairobi — The government of Kenya has long recognised the importance of Liquefied Petroleum Gas as an alternative household energy source that could replace use of biomass. The need to replace use of biomass as a primary source of energy in Kenya has become inevitable due to the undesirable results that come with its combustion.

Statistics indicate that at least two million people die annually mostly in sub Saharan Africa and Asia due to respiratory complications emanating from inhalation of toxic products of incomplete combustion of biomass.

Conservative estimates indicate that biomass contributes to 68 per cent of the energy consumption in Kenya with petroleum contributing per cent while electricity contributes about nine per cent. Renewable sources of energy such as wind and solar contribute about one per cent. A lot of effort has been put by the government to ensure that LPG is conveniently availed to the populace and at an affordable price.

Amongst these efforts include the standardisation of LPG cylinder valves by the government through legal notice 121 of 2009 and the establishment of the LPG cylinder exchange pool that allows the interexchange ability of different brands of cylinders.

This piece of legislation has ensured that consumers do not traverse long distances in search of a particular cylinder brand outlet at the time of refill and as such they can exchange one brand of cylinder with another at any retail oulet.

In addition, the government through a Public Private Partnership oversaw the building and commissioning of the largest LPG import terminal in East and Central Africa. The terminal has a capacity of 14,000 metric tonnes and is located at Miritini Mombasa. This terminal has enabled the LPG industry to import cargoes of up to 10,000 metric tonnes as opposed to earlier sizes of between 1,200 and 1,500 metric tonnes.

The immediate impact on the use of this terminal will be a reduction in the freight and premium rates of the cargoes which is expected to translate in a reduction in LPG prices. A further reduction in the price of LPG will be realized from a reduction in the amount of demurrage costs due to faster ship offloads as a result of the expansive LPG receipt space.

The current annual LPG consumption in the country is estimated at about 90,000 metric tonnes which roughly translates to 2.25 kilos per capita consumption which is below the average consumption rate of 3 kilos per person in Africa. However, it is envisaged that the demand for LPG in Kenya is expected to peak about 200,000 metric tonnes once the constraints in the current supply chain are smoothened out.

– The Star

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