INTERVIEW WITH EMMANUEL MANGENI, DIRECTOR/CONSULTANT AT ULTIMATE GAS, UGANDA – THE ‘SILENT’ LPG AMBASSADOR IN UGANDA
— November 30, 2016 0 1140UGANDA LPG MARKET
Tell us about your journey towards and throughout the LPG industry.
I first interacted with LPG slightly over 10 years ago as a Business Consultant in charge of LPG with Chevron in Uganda. Prior to this I had been playing a role in the general petroleum downstream sector in Uganda as the head of sales and marketing for a local independent firm Hared Petroleum. 4 years down the road into my career at Chevron in 2009, the company withdrew it’s operations from Uganda and most of Africa and sold to TOTAL.
Hence I moved into Total Uganda where I took on the mantle of LPG Manager. It is here that I started spreading my wings in the LPG sector more fundamentally. Even after leaving mainstream employment with Total in 2011, I continued to play an even deeper and more important role in the Uganda LPG sector both as a key driver of the local LPG Association (ULPGAS) which I helped in forming, as well as a Consultant and LPG distributor under my firm Ultimate Gas Professionals Limited.
What are some of your most notable experiences/ achievements?
I had a torrid experience at Chevron where I found that while there was growing demand for its gas, the company had invested very little in supporting logistics todeliver LPG. I got deeply involved in a couple of project studies which were aimed at rectifying this anomaly but there was no time to deliver LPG. I got deeply involved in a couple of project studies which were aimed at rectifying this anomaly but there was no time to implement them as the parent company later decided to withdraw from Africa all together. There was a lot of backlash from the market.
At Total I found that there was already a project to grow the storage and cylinder logistics capacity, but only required an experienced personnel to drive the volumes in order to justify the investment. I ably filled that gap and left a couple of years down the road on a high note as far as the sales volumes were concerned. Indeed my campaign locally was recommended for adoption by a number of TOTAL affiliates globally.
During my time at Total, I met Dr. Emmy Wasirwa who was in the process of establishing his own independent LPG operation (Wana Energy) from the ground. He was having challenges connecting with support networks within the industry and I tried to help him with a few connections. Later on out of the difficult experiences as well as recommendations from his global interactions, he coined the idea of forming the Uganda LPG Association (ULPGAS) as a body established to facilitate, support and protect the interests of all players in the Uganda LPG sector. I supported him in the idea and provided back end support since I had been at the top of the industry for the past 10 years and knew all the dynamics.
I however knew of the culture in Uganda where the multinational players completely mistrust and detest independent players. I knew he would have a rough time convincing them (the multinationals) to join in the association initiative, and so I thought to bring the Totalgaz leadership into the fray with a hope that they would take charge of the initiative and run with it to fruition. It only made matters worse.
SHELL who had been the bulls in the Ugandan petroleum industry quickly smelt a rat and jumped in to avert the oncoming threat to their ‘political’ dominance in the industry. Using a loophole in the way Dr. Emmy was trying to establish his company, they (SHELL Uganda) smartly demonised him and made it unattractive for the other multinationals to engage with him in the initiative. There was a bit of drama which sucked in the Minister of Energy and the WLPGA leadership. But SHELL seemed too powerful for them all even when they (Ministry & WLPGA) were supportive of the idea. Later having sensed that the Ministry, TOTAL and WLPGA had cooled down their resolve to support ULPGAS, SHELL approached the association with a proposal for it (ULPGAS) to operate as a sub-unit under APMP (Association of Petroleum Marketing Professionals) which is the local industry’s lobbying force dominated by the multinationals under SHELL leadership.
With my coordination between the 2 parties, we are today trying to work out an amicable middle ground. The overriding position however is that a national LPG Association should always stand alone and not be cocooned under another association. The whole fracas was a thrilling experience to me. That is the Uganda LPG industry leadership challenge for anybody who wishes to know. My LPG story cannot be fully told without this phase.
Nonetheless the association (ULPGAS) took off with a number of independent LPG players subscribed to it and registered a number of remarkable achievements and milestones which are bound to affect even the multinational players who chose to stand by the side. For example the association lobbied government to draft baseline LPG standards which were never in existence in the country. It also ensured that the national oil and gas policy which is due for revision soon has fully catered for the LPG sector which was never clearly outlined in the past. It organised workshops and conventions, as well as trainings which staff from all over the industry including from among the ‘protesting’ multinationals attended.
Right now the focus is on getting government to fully support the sector by way of planning for a national LPG promotional campaign which would entail supporting investors in the sector as well as developing substantial infrastructure to support growing demand expected to arise from this campaign.
The first step in this direction is currently underway with the Ministry of Energy commissioning a baseline national LPG study which is supposed to present the status of the industry and propose solutions and a program towards addressing these challenges. When this happens, the flood gates are bound to open up for all sorts of investors going to Uganda.
Tell us about your work at Ultimate Gas.
At Ultimate gas, I am the Director running the day to day distribution operations with a flamboyant team of young professionals whom I have fully inducted in the trade, as well as the lead consultant on the Consultancy wing. We are a key distributor of TOTAL Gas in Uganda and the only specialised research and consultancy firm for LPG in Uganda and the East African region so to say. We are not the same company as Ultimate Gas in Nigeria.
As a consultant I am always in engagement with foreign companies intending to enter the Ugandan market. I give them free basic consultation, but charge a small fee for a detailed study and recommendations for market entry. I do the same for government and we are one of the part of the study firms being consulted by the Ministry of Energy about conducting the baseline LPG study which I talked about earlier.
I also network with other industry players in respect of establishing a common playing field in the industry through a unified association, as well as snaking with other energy stakeholders such as those advocating for clean energy cooking solutions e.g. GVEP, UNCCA (Uganda National Clean Cookstoves Association), among others. I represent ULPGAS on the LPG standards technical committee at the Uganda National Bureau of Standards (UNBS), and I am frequently invited to present developments and the market scenario of the Uganda LPG industry at regional and continental conferences.
UGANDA LPG MARKET
What stage do you feel the LPG industry in Uganda is in? (developed/developing/ mature)
This is strange to say but to me the LPG industry in Uganda is fairly stagnant. Whereas its status clearly falls in the category of ‘developing’ market, an average 10% annual growth rate from volumes as little as 5,000 Tons in 2005 is nothing to write home about. I sit in conferences where countries which are doing 350,000 Tons per annum are complaining about their industry being small. Does Uganda really exist in this field I ask myself? This is why I resolved to work day and night to get the Uganda LPG industry off its feet and running.
INTERVIEW
What sort of yearly consumption of LPG does Uganda have?
As mentioned above, we are still a long way behind coming from about 5,000 Tons in 2005 when I first joined the subsector to only approx. 13,500 Tons 10 years later in 2015. With a population of 37 million people, this represents only 0.3% LPG per capita. In terms of household uptake based on 5 persons per family, the percentage uptake currently stands at only 1% with a very huge potential if the right actions are taken especially by government in supporting the sector.
What is the LPG transport and supply infrastructure like in the country?
In terms of LPG transportation, the only means currently in place is by road. While the country discovered some oil and gas resources which are bound to supplement domestic supplies, to-date all of the LPG being consumed in Uganda is 100% imported through Mombasa port in Kenya. Only a fraction of this quantity comes in through the Dar Es Salaam port in Tanzania. Each player does the purchasing and importation through their sister companies or business partners in these 2 ocean bordering countries.
Regarding storage infrastructure, the total capacity as held by all 15 players in the industry at the moment is still slightly under 1,000 Tons countrywide. There is indeed still a lot to be done. And this presents a huge opportunity to specialised players out there as well.
Does Uganda face LPG supply issues like many other African nations? Where does Uganda import its LPG from?
As clearly described above being a landlocked country, we source all our supplies through our neighbours Kenya and Tanzania. We simply feed from them, and I could say we take up the excess quantities which they secure at any one time. Any upheaval or slight delay of supplies into Kenya or Tanzania, Uganda shall be the worst hit and because we can only get fresh product supplies after the 2 ocean-bordering countries have substantially re-stabilized their domestic market supplies before considering re-export into Uganda. A clear example of this scenario clearly played out during the 2007 Kenyan election violence when we had no LPG supplies in Uganda for nearly 1 month or more.
What is the price of LPG in Uganda?
A bottled Kg goes for about $2.6 per kg, that is $40 for a 15kg refill. This is quite high for the average Ugandan hence the small national volumes. But it could be cheaper. The only problem is that given the meagre volumes, the players must charge such an amount in order to recover their investment sank into infrastructure and the transportation charges from the long importation distances covered by the cross-border trucks. Everybody I have told about the Ugandan margins has whistled in the air in amazement. But I don’t blame the players given the above sighted reasons for that. It is up to government to come in and intervene by way of boosting public uptake of the product which will certainly increase the volumes and bring down the prices.
Which LPG companies dominate market share in Uganda? (How does Ultimate Gas fall into this mix?)
By the time I joined the industry in 2005, Shell having been the pioneer of LPG in the country controlled over 80% market share. By the time I left Total, I had played a huge role in cutting down on this near-monopoly by more than half. Today Shell and Total together control slightly over 50% of the market share with the rest of the chunk being shared among the other 13 Regional and independent players such as Kobil, Oryx, Hashi, Oil Libya, etc.
Is the ruling government supportive of LPG?
The ruling government is generally oblivious of the potential of LPG or its impact. In terms of fulfilling the country’s energy demands, it is purely focusing on hydro electric projects which unfortunately keep returning expensive energy for the population. Hence the uptake for its offered energy alternative is literally as dismal as the uptake of LPG which it has not supported at all thus far.
However, I have personally made fundamental strides in telecasting this potential of LPG to a few of the ruling government leaders and they have been absolutely amazed and are supportive. It is now down to the technocrats at the Ministry of Energy to carry this mantle and deliver the service since there is assured political will and support from the top.
What are some of the major barriers to further LPG development in Uganda?
The biggest barrier if I am to call it one at all has been government’s silence on the sector. This is however beginning to change, and the government also sees an opportunity of supplementing to the supply base of the product from the small oil resources recently discovered in- country. Otherwise the associated gas, if not re-used as production feedstock, will simply be flared by the licensed oil production firms Tullow, CNOOC and Total.
Aside of supplies constraints, regulation, infrastructure and awareness are the other key barriers to development of the sector. And government has got a strong role to play in all of these, and most work hand in hand with the private sector players. If all of these are resolved, then the final puzzle to the equation which is “affordability” to the user can be addressed using several measures which have been employed by different countries whose LPG sector has suddenly become vibrant.
In your opinion, what are some measures that could be undertaken to solve these issues mentioned above? While government is already underway with these solutions, I can summarise them as creating an enabling environment in respect of policy, standards and regulation, as well as working hand in hand with the private players to address infrastructure and supplies challenges. In terms of mass awareness campaigning, the government of Uganda is one of the heroes in having carried out a concerted campaign which saw the AIDS prevalence in Uganda drop from an appalling 25% in 1986 to under 7% today. It is indeed capable of using its political and communication structures to cause a fundamental shift in energy usage if it so commits to doing so.
On the other hand private companies like the Mobile Telecommunications company MTN in Uganda has single-handedly run massive promotional campaigns in the past which stimulated uptake of Mobile telephony usage in the country from a paltry 100,000 users in 1998 to over 10 million users today out of a local population of 37 million. Hence it is well proven that in Uganda. The masses are quick adopters if they are invited to with the right resources strategically put in place.
FUTURE OF UGANDA LPG
Other than for cooking, does LPG have potential for any other uses in Uganda
in the near future? (Power generation/ Autogas?)
Other than for cooking, LPG in Uganda is also used in manufacturing to fire furnaces, in Agriculture to support heating of Chicken houses, in School laboratories and kitchens, for preserving vaccines, among others.
Auto usage or power generation from LPG is still a remote prospect given the meagre supplies volumes and challenges. Even the gas to be gotten from the domestic refinery is likely not to be enough and will require increased importation of additional supplies especially when government undertakes the massive promotion of the product which it thus far seems committed towards doing.
What is your overall outlook for the future of LPG in Uganda?
In a nutshell, any LPG player from around the region or even the world who looks and makes a decision about investing in Uganda based on its current status quo could be making a big mistake and may come in to play a part when it is a little late.
I do believe that there is now full government commitment and momentum towards supporting and enabling the LPG sector and I am quite optimistic that in doing this, and with everything in place 10 years down the road from now, the country shall be doing no less than 300,000 Tons per annum (25% uptake) with a strong possibility of even doing more with different initiatives.
(LPG Business Review)
EMMANUEL MANGENI
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