Women carry gas cylinders to be refilled at a distribution point in Cairo January 19, 2015. Egypt is going through its worst energy crisis in decades and is seeking fresh sources of natural gas, which powers most of its homes and factories.   REUTERS/Mohamed Abd El Ghany (EGYPT - Tags: ENERGY SOCIETY BUSINESS COMMODITIES POLITICS) - RTR4M0SS

INTERVIEW WITH FATHI SHAMMA, PRIVATE LPG CONSULTANT – BENEATH THE SANDSTORM SHROUDING EGYPT’S LPG INDUSTRY

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Egypt looks like a real powerhouse when it comes to using and producing LPG on paper. The country consumes 4.3 million tonnes of the fuel each year, producing 1.47 million tonnes and importing another 2.18 million tonnes. Gorging on so much of this gas – together with Libya, Morocco and Tunisia, these countries actually make up 68% of the continent’s total LPG consumption!

We decided to speak to Mr. Fathi Shamma, who is a private LPG consultant who has spent much of his time in the LPG industry in Egypt. We were extremely interested to nd out more about the industry there and what were the prospects for the future.

Fathi Shamma began his career in LPG in 1994 where he worked with Kuwait Oil Tanker Co. (KOTC), LPG branch, which was the only company in Kuwait dealing with LPG till 2010. He told us that KOTC was mainly involved in storing the LPG, and lling of LPG cylinders. He mentioned that KOTC had followed the latest technology at the time and was the second company to apply the technology for the lling process ( carousel ) through the use of mass ow meters.

He joined the company as Senior Operation & Maintenance Engineer, following which he became a team leader for Operations & Maintenance, and ended o as T eam Leader for Technical Support. Throughout his illustrious career he’s been involved in numerous aspects of the LPG business which includes working on maintenance plans for LPG equipment and storage tanks and pipelines, reviewing and verifying the speci cations of LPG cylinders and witness the manufacturing the LPG cylinders, LPG semi-trailers trucks, preparing the EPCs for new projects, carrying out HAZOP and risk assessment for LPG facilities and terminals as well as also designing and preparing technical speci cations for new LPG plants.

Beneath the Surface

Fathi told us that the situation in Egypt however is not all as rosy as it seems. Just by looking at the numbers you’d think that the Egyptians have a thriving LPG industry lled with government support and private enterprise involvement of all shapes and forms. Apparently, the industry there is still in the developing  phase and needs a lot more e ort from the stakeholders if it wants to continue down its path towards greatness. Fathi says that many LPG operations in the country are not making use of the latest technologies that are available and often times do not have a focus on safety. Taking the focus away from safety can be extremely detrimental to the future growth and development of the industry as once accidents become a common thing, it will surely dissuade the public from nding other uses of the gas.

Fathi said that LPG infrastructure is quite decent and they make use of a large virtual network that involves a huge eet of around 400 LPG supply trucks that do the ferrying from terminal to lling plants to distributors. The problem here is that the distribution system is described as ine cient due to frequent and persistent supply shortages and exaggerated waiting times in long queues to get cylinders. Supply issues have resulted in numerous protests in 2015 against the price of LPG on the black market as consumers were as paying as much as LE60 per cylinder and that many factories were manipulating the weight of the cylinders.

On top of this, the usual culprits that plague the industry are apparent here as well – with high entry costs, limited awareness from the general public and poor safety practices across the industry.

Government Support

The government has sought to solve this issue by pushing their “Egypt Household Natural Gas Connection Project” which aims to replace household consumption of LPG to grid connected natural gas. The government has invested USD 500 million into the project. This initiative away from LPG does not bode well for the growth of the LPG industry there. The government has been slowly moving along with their plans to expand the gas grid through this project which is in aim of connecting another 2.5 million households to switch over from LPG use to natural gas. As of 2015, it is expected that the project reduced LPG demand in Egypt by roughly 132,000 tonnes a year as another 333,000 households have been connected to the gas grid across the country. It is unknown if the Government will continue down along this path in support of natural gas over LPG but if they do, it is not very encouraging to say the least.

The government has also been working on tackling the problems of corruption and black market sales of cylinders but with limited success. From the Muslim Brotherhood goverment to the new Egyptian Armed Forces led government, there is still a lack of clear strategy for LPG. Fathi tells us that the government support system is present and should work, however it only works on paper and the reality of the situation is very di erent. He says that this is the biggest problem faced by him in trying to develop and improve the LPG business in Egypt.

Fathi told us that on his side he too has worked hard to try to improve the situation in Egypt for the better. He said that, I worked very hard to try to improve safety and e ciency in Egypt. I tried to introduce Alpha Process Control Co. from the UK to the gas companies in Egypt, emphasising on the bene ts of lling process coupling, showing tremendous improvements in safety and cost savings that can be gained through the system. My e orts were in vain however, as the mentality of the people defeated the process. There was very little interest in improving things from the government and main players in the industry.”

Subsidies

In 2013, the government attempted a subsidy reform by implementing a smart card system that would allow the poorest consumers to continue to bene t from subsidies. Under the new ration card program, each household would receive a monthly cash allotment on the smart card, which could be used to redeem any of the subsidized commodities including LPG.

The actual price of a cylinder in Egypt is roughly LE70 but only costs consumers LE8 after the subsidy . Unfortunately , street vendors control the price due to the ine cient supply and take advantage of shortages to jack up the price of the gas.

Moving Forward

In moving forward towards the future, Fathi tells us that the biggest issues that need improvement in the country are training LPG professionals and sta in the best practices for handling and distribution of LPG and getting them updated with the latest codes (NFPA 54 and 58) and cycling out the older generation of professionals with a new and younger workforce with a fresh perspective on things.

He goes on to say that despite being Egyptian and being wholly invested in the LPG industry, he feels that the future for the industry in the country at this point is not clear and will need tremendous amounts of e ort to e ect a real change. He says that this gurative ‘sandstorm’ over Egypt’s LPG industry is the unfortunate reality of the situation as all LPG infrastructure in the country is antiquated and needs to be inspected and checked according to new codes and safety regulations.

(LPG Business Review)


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Fathi Shamma

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