Mozambique is a country which has become more well-known due to its vast natural gas discoveries which have been made in the last few years. What’s not been made very clear in the media is that the country has a lot of its own problems internally such as poor electrical grid connectivity and lack of proper gas supply infrastructure. These problems are not able to be solved by using natural gas immediately, as a more than hefty investment is required to establish a natural gas infrastructure network. As with many other African countries that face similar problems, the solution has often been LPG. Firstly, let’s look at how LPG is used in the capital city – Maputo and what problems are being faced. Then we’ll explore what potential LPG has for the future and later, at how it’s solved some very pertinent problems in more rural parts of the country.
A Lust for Charcoal
LPG consumption currently is focused at the top level of income earners in the country. The current distribution network does not reach the lowest earners who are still fixated on using charcoal for their daily cooking needs. The current models that the distributors in the country use are unable to sustain distribution to an uninterested rural population who do not know the benefits of LPG. Raising awareness is something that takes a lot of time and investment and the companies would much rather use their resources elsewhere.
Even if there was a proper distribution network that could reach the rural communities, it is unlikely that they would even have the finances to begin using LPG. There is a significant upstart cost to begin using LPG which can often be out of reach for people in the lower income bracket – they would require new stoves and new cylinders which aren’t cheap for them and would also be seen as a luxury. ‘Why spend on something that we don’t need?’, would be the rhetoric of the people.
A Change in Heart
LPG could be seeing an opportunity to capture the hearts of the people however. Charcoal prices in Maputo have been increasing rapidly over the past few years and increased more than 260% from 2010 to 2013 according to a study conducted by the Maputo City Council. Their survey also indicated that more than 60% of the respondents in these low-income areas recognized that LPG is an ideal alternative for cooking.
Some other surveys conducted have shown that LPG use has increased 8.4% a year on average since 2010 in Maputo. It has also been reported that even of those who have begun to use LPG, use it as a combination with charcoal. The results showed that only 3% of the respondents use LPG exclusively and not as a mix with charcoal. This tells us that LPG still has huge potential for growth and might be gaining some real traction in the rural community and that it can further reduce charcoal use much more.
Supply Chain Issues
Mozambique currently has no refinery of its and must import all LPG from outside the country. 30 years ago, the country did have a refinery but it was shut down during the country’s civil war. The only importer of the gas in the country is Petromoc. The company was given the role of the official importer for LPG into Mozambique by the Government.
The company owns and operates a 3000 MT facility on the coast that receives gas from ships. Most of the countries imports come from South Africa and this makes the country almost completely dependent on a single supply source. This makes the country extremely vulnerable to supply shortages from South Africa which have happened as recently as June this year.
The problems don’t just stop there though, where distribution within the city is concerned, LPG is distributed mainly by Imopetro, VidaGas, Mocacor and Petrogas whereas Afrox and Vitagaz handle the rest of the country. Currently only 11kg cylinders are available for use and this is not the most practical for low-use, low-income consumers. Refilling becomes an issue and up-front costs for an 11kg cylinder are high at 643.94 Meticais (9.14 USD) considering household income in rural areas is only 4654 Meticais (66.06 USD). There is a resale market in which retailers do sell the gas to consumers but these retailers often charge consumers more than the current government mandated prices.
Vaccine use in vastly rural community based countries such as Mozambique are few and far between. Low income countries rarely see their immunization rates above 80 percent due to inaccessibility and poor transportation and storage conditions. Mozambique has faced these issues along with many other nations in Sub-Saharan Africa. The supply of vaccines to rural healthcare centers has been poor and with less than 35 percent of the country with access to the electrical grid, the rural community sees a much larger proportion of their communities off-grid. The impact that this has on health services is undeniable and the quality of the service that can be rendered is dismal compared to those in developed towns. The lack of reliable electricity results in wasted vaccine stock as there is nowhere to store the vaccines till they can be used. Many of the vaccines are even destroyed during the long transit journey to the health care center. Moreover, the lack of power makes it difficult to sterilize medical equipment and even for lighting during medical procedures performed once the sun sets.
These problems are not unique to Mozambique. It is the same case for many African nations as well. The key here is to educate and increase awareness through public information and community reach campaigns that teach the uninformed public on the benefits and uses that LPG can have to the society. Businesses can profit if they allocate some funding to these areas but without assistance from the Government it is still a difficult task.
The Government has mentioned in its national policies and strategies that LPG is part of the country’s energy fuel mix. It has said that LPG will be a complimentary fuel in their fuel supply mix and that it will add diversification to their energy supply. Currently LPG consumption is focused mainly at the top end of income earners. The government feels that with more investment into supply infrastructure it will bring down the cost of LPG and the barriers faced by lower end income earners will be able to be trumped through increased awareness and affordability.
Though the government is essential in moving industries towards success, there are numerous things that can be done by players in the industry to help the industry reach its true potential as well. In Maputo City, several private industry players have identified problems and proposed, if not developed solutions themselves.
Petrogas LDA (Subsidiary of Petromoc) – They identified two major problems: low income households find it difficult to invest in an 11kg cylinder due to sparse and periodic income, and the previous 1000 tonne offloading facility in Maputo was insufficient to meet demand. Their solution? Petrogas introduced a variety of bottle sizes to the market with the smallest of these being just 4.5kg which would allow low income households to have the capacity to afford a much smaller cylinder. They also increased the capacity of the facility to contain another 2000 tonnes where LPG would be stored in above ground mounded storage bullets.
Gavedra Mozambique – Like Petrogas, they identified that upstart costs in switching from charcoal to LPG is significant. LPG could be provided to various neighborhoods in Maputo to get the community started on using gas and eventually have them become reliant on it. This will consequently create a profitable sales market for distributors. The plan is to seek more financing partners and provide upstart LPG and accompanying stoves to 14,000 families living in neighborhoods Mafalala Polana Canico “A” and Polana Canico “B” District Municipal KaMaxakene (DU3).
Collaboration Saves Lives
When private entities work together with the government to grow something the results can be truly spectacular. One amazing feat that has been accomplished in Mozambique is through the collaboration of VidaGas and the Fundação para o Desenvolvimento da Comunidade (Foundation for Community Development).
In 2002, VidaGas was created and began supplying LPG exclusively to these centers. The supply of LPG to these rural health care centers allowed for all these problems to be solved – vaccines could be stored through LPG powered refrigeration. Eureka! From this, LPG has then been used for cooking, heating and electricity above all things, allowing these centers to provide a proper standard of health care to the surrounding communities. Members of these rural communities can now get all forms of medicine that require cold storage, especially vaccines for infants and procedures can now be conducted at any time of the day, even in the darkest of nights. LPG has not only increased the quality of people’s lives here – it has saved thousands. Since then, VidaGas has provided gas supply to restaurants, hotels, small factories and even has a large retail network that provides LPG to households replacing their charcoal use. The company makes use of this income network to continue to provide gas to rural healthcare facilities and has since become the largest independent energy service provider in Northern Mozambique with three large tonnage storage and filling facilities across the region serving five provinces and more than 50 percent of the countries rural health care centers.
Looking at what has been done here and what more LPG can do for Mozambique makes you feel like there’s endless possibilities for this gas in rural Africa. It’s not that far off if we’re being honest. Perhaps models like these in Mozambique can be applied elsewhere in Africa and Mozambique could learn how to grow its own LPG industry in Maputo from more developed cities like Nairobi in Kenya and Lagos in Nigeria. What is known for sure though, is that collaboration is what makes things work and it’s what
changes lives for the better.
(LPG Business Review)