Liquefied Petroleum Gas (LPG)

In late 2016, Africare Nigeria embarked on a campaign to increase the demand for clean cookstoves across Nigeria. The goal of the initiative was to help increase household adoption of liquefied petroleum gas (LPG) and LPG cookstoves (clean cookstoves) for home and business use. The reasons given were for improved health, improved livelihoods, and positive effects on the environment. My consulting firm, Arabale Limited, was engaged to measure the total value realized from the initiative. This article explains the total value that can be realized from widespread adoption LPG and clean cookstoves across Nigeria.

From the small sample size used of about 50 households on the outskirts of Lagos, the total value realised from upgrading to LPG was 3.09. This means that for every Naira invested, approximately 3.09 Naira total value was created. That is 3 times the value invested, or 300% return on investment.

LPG1

The Primary Stakeholders & The Total Value Created

Why LPG?

Upgrading to gas is critical for the health and livelihoods of all Nigerians. Current living and economic conditions, amongst other factors, around the world and in Nigeria, are negatively affecting morbidity and mortality rates. In addition, social, economic, and environmental livelihoods are being threatened and eroded daily.

According to the World Health Organisation (WHO),

  • 3 billion people cook and heat their homes with open fires and simple stoves, burning biomass and coal. At least 1.2 billion people lack access to electricity and many of them use kerosene lamps for lighting which exposes them to very high levels of particulate matter (soot) and household pollution.
  • Household air pollution has health risks. Annually, 4.3 million people die prematurely from diseases such as stroke, ischaemic heart disease, chronic obstructive pulmonary disease (COPD) and lung cancer. Over half the deaths from acute lower respiratory infections (ALRI) and pneumonia in children less than 5 years is due to soot.
  • Exposure is particularly high among women and young children who spend the most time near the domestic hearth.
  • Fuel gathering exposes women and children to risk of injury and violence, and takes time, limiting other productive activities that could generate income and taking children away from school.
  • Black carbon and methane emitted by inefficient stove combustion are powerful climate change pollutants.

In Nigeria,

  • Over 80% of 36 million households cook with dirty fuels: firewood, sawdust, crop waste, charcoal, animal waste (dung), kerosene and plastic bottles. That is, an estimated 29 million households with men, women and children, and extended family members.
  • Deaths from firewood smoke is the third highest killer in Nigeria after malaria and HIV; 98,000 women and children die from diseases caused by toxic cookstove smoke every year.
  • Pregnant women risk harming their unborn children.
  • Women and girls who go to collect firewood are at risk of being assaulted.
  • Nigeria loses 3% of its forests every year to deforestation (it has one of thehighest rates in the world), which leads to loss of habitation for many plant and animal species, through erosion, desertification, climate change and food insecurity, thereby threatening their survival.

WHO says that a move to propane, or LPG, will result in no fumes exposure and therefore much reduced rates of adult and child mortality and health issues. LPG is one of the cleanest, healthiest, and most efficient cooking fuels available. It is burnt completely so none is wasted and switching to LPG will result in greater economic opportunities.

 

Nigeria

The Nigerian government appreciates the following LPG benefits:

  1. It is more cost effective than unsubsidized kerosene and firewood due to its higherenergy content.
  2. It is an alternative to petrol for automotive transportation and can also power industries and small power plants.
  3. It is easier to handle (cylinders) and can be transported in bulk on trucks and via rail to every part of the country, especially to areas where pipeline gas can not easily get to.

Nigeria is blessed with abundant reserves of natural gas, estimated to be in excess of 180 trillion (standard) cubic feet (Tcf), making it ninth in the world. This volume is estimated to be sufficient to sustain current production rates for over 60 years. Geologists believe that there is a lot more gas to be found potentially up to 600 Tcf, if companies deliberately explore for gas, as opposed to finding it while in search of oil.

Nigeria Liquefied Natural Gas Limited, NLNG, produces high quality natural gas liquids, comprised of LPG (propane and butane) and condensates, and currently has the capacity to produce up to 5 million tonnes per annum. But Nigeria’s LPG consumption was only about 400,000 metric tons annually by 2015. This translates to a per capita consumption of less than 2.5kg, which is extremely low compared to South Africa, 7.28kg; Ghana, 9.45kg; and Morocco, 66.27kg. Most of the LPG produced in Nigeria today is exported, and over 40% of domestic consumption as of 2015 was imported.

The low level of LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as the primary domestic cooking fuel, which results in the government undertaking huge subsidies, over US$1 billion in 2015 on kerosene subsidy, and a significantly high rate of deforestation with over 95.76 million metric tons of firewood used in 2015.

 

Conclusion

Upgrading to gas across the country has the potential to create a lot of value for all stakeholders especially Nigerian households and the Federal Government of Nigeria. The benefits of LPG over dirty fuels cannot be over-emphasized. Nigeria is a country that is blessed with natural gas so the potential to save lives and increase the GDP by increasing supply and helping to reduce our dependence on oil is huge.

The Africare Nigeria initiative is a step in the right direction but more work has to be done. Stakeholders and the government must realize that they can make more money by doing good.

Based on our work, we propose the following:

  1. The decision to upgrade to gas is a matter of life and death. Currently, dirty cooking fuels are used predominantly in over 80% of the households across Nigeria and studies show that household air pollution is the number 3 killer of Nigerians, especially women and children. Purely from an economic standpoint, we estimate the minimum value of an adult life to be about 5.8 Million Naira. Based on 18, 000 Naira monthly minimum wage, and 54 years as the average Nigerian’s life span (World Bank), saving a life at 27, will save 5.8 Million Naira. There are an estimated 190 million Nigerians (World Bank), and 60% of them are estimated to be below 35 years so this has serious economic implications for the country.
  2. Providing an affordable financing option for low-income households to switch is critical for mass adoption of LPG. Studies show that high-income households tend to benefit more from subsidies, or the funds are diverted and do not reach their intended beneficiaries.
  3. Men should be targeted to make this decision as they are traditionally the decision-makers in the home, especially major expenses. Nigeria is predominantly a patriarchal society.
  4. Religious houses and programs are ideal to market the use of LPG. Over 90% of Nigerians are either Muslim or Christian.
  5. It is important that fire extinguishers are factored into purchases and the Federal Fire Service of Nigeria should be engaged.

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