SlideShare a Scribd company logo
1 of 35
Download to read offline
DLPG SCHEME: THE JOURNEY
SO FAR!
Presentation By Mr. Norbert Shialsuk to the 1st
Nigerian LPG Summit Organized by The
Department of Petroleum Resources on the 12th &
13th October 2009 @ ICC Abuja
CONTENT
  OBJECTIVE AT BEGINNING OF SCHEME
  Achievements
  Challenges
  Solution: LPG Almighty Formula
  Role of NLPGA
  Way Forward
10/10/09
3
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
OBJECTIVES OF THE DLPG SCHEME
  Supply LPG From Nigerian Production in Bonny
  Which was impossible prior to now
  Bridge Supply Logistic Gap btw Bonny & Lagos
  Eradicate Scarcity of LPG
  Reduce Hiked Prices; Make More Affordable
  Improve Infrastructural Imbalance
  Reintroduce LPG and Create Awareness
10/10/09
4
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
BRIDGING THE LOGISTIC GASP…
Bonny River
Terminal
BW Saga in STS with
LPG/C Blue Gas
10/10/09
5
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
  Objective at beginning of Scheme
  ACHIEVEMENTS
  Challenges
  Solution: LPG Almighty Formula
  Role of NLPGA
  Way Forward
10/10/09
6
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
ACHIEVEMENTS
  Retail Price Dip – from N10,000 > 2200 per
12.5kg
  Market Stability
  Sustained Supplies; cutting scarcity
  Restored Confidence attracting New Investments
in LPG
  New Filling Plants Springing Up
  Old Plants Revived
  Customers more sensitized; Expectant
  Fruitful Partnership between NLNG and the 6
Off-takers
10/10/09
7
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
  Objective at beginning of Scheme
  Achievements
  CHALLENGES
  Solution: LPG Almighty Formula
  Role of NLPGA
  Way Forward
10/10/09
8
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
CHALLENGES: BERTHING DELAYS
STS
OPS
VESSEL LOAD
DATE
DISCHA
RGE
DATE
TIME INV.
DATE
20 Blue Gas 03-10-08 17-10-08 14 Days 02-11-09
21 Blue Gas 18-10-08 29-10-08 11 Days 17-11-09
22 Blue Gas 29-10-08 14-11-08 14 Days 28-11-09
23 Blue Gas 18-11-08 25-11-08 8 Days 17-12-09
27 Mayfair 20-03-09 08-04-09 20 Days 19-04-09
28 Mayfair 21-04-09 14-05-09 24 Days 20-05-09
29 Super
League
08-05-09 11-06-09 34 Days 07-06-09
30 Mayfair 27-05-09 29-06-09 33 Days 26-06-09
31 Super
League
20-06-09 20-08-09 61 Days 19-07-09
36 Mayfair 29-07-09 31-08-09 33 Days 28-08-09
40 Mayfair 03-09-09 17-09-09 15 Days 02-10-09
10/10/09
9
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
CHALLENGES: MARKET INSENSITIVITY
  OPIS Mont Belvieu Upward Trend
  Local Ex-Depot Prices Remain Constant
  Retail Prices on an Upward Trend due to
speculation by Rogue Traders/Distributors
  Off-takers taking all the RISKS; Rogue Street
Traders Taking all the PROFIT (See next Slide,..)
10/10/09
10
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
LAST MILE BOTTLENECK = CYLINDERS
  However, bottleneck is
no in cylinders:
  Even though Offtakers
sell ex-Apapa depot at
N1,200 and ex-plant at
N1,500 – N1,750, road
side retailers still sell
at approx. N2,500 –
N3,500 per cylinder!
  Roadside and Retail
Gross Margins are
70–100% Today!!
11
Cylinder Price Ex Plant
SHIFT IN VALUE CHAIN FROM 2008 TO 2009
12
CHALLENGES: CYLINDERS > DEPTH
  Nigeria’s Population: 140 million
  Nigeria’s Cylinder Population
  All sizes: Less than 1 million (Approx. 500,000)
  Capacity 500,000cylinders x 12.5kg = 6,250,000kg
  6,250,000kg = 6,250tons
  Annual Capacity = 6,250t * 12months = 75,000tons
(Assuming Users fill once a month)
  Shallow Market
  Focus Investments on Cylinders; Distribution
 To ACHHIEVE 1MTPA? NIGERIA
REQUIRES 40M CYLINDERS!
 Equivalent to N200bn
10/10/09
13
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
MARKET DEPTH: SA
  S. African Population: 25 million
  S. Africa cylinder population
  Large Cylinders (9kg & above): 5.5 million
  Small Cylinders (below 6kg): 7 million
  TOTAL 12,5M CYLINDERS
  Local Refinery Supply 370,000tons in 2007
10/10/09
14
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
CHALLENGES:
ROGUE TRADERS
  Short Filling
  Rusty Cylinders
  Price Hiking
  Shoddy Practices: HSE Concerns
  Regulatory Oversight
Not Adequate at this level
10/10/09
15
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
CHALLENGES: ILIQUIDITY
  Constrained Cash Flows Due to Huge Logistic
Costs
  Limited Cash Available for Investment in
Infrastructure
  No Bank Funding
10/10/09
16
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
CHALLENGES: OTHER
  Disincentive to Investment
  Dual licensing/Regulatory Agencies – DPR/SON
  SON Certification Hurdles
10/10/09
17
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
  Objective at beginning of Scheme
  Achievements
  Challenges
  SOLUTION: LPG ALMIGHTY FORMULA
  Role of NLPGA
  Way Forward
10/10/09
18
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
LPG ALMIGHTY FORMULA…,
C A R X2
Where:
C = Cylinders
A = Awareness
R = Regulation
X2 = Exponential Growth in LPG
10/10/09
19
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
  Massive Injection of Cylinders
  40 Million Cylinders Required to reach 1MTPA
  Private Investment or
  Government Funding
  IF Private Investment
  Then Specialization of Cylinder Valves
  Protection of Investment; Guaranteed ROI
  IF GOVT. FUNDING
  Then Standard Valves Remain
  NLPGA Recoups Cylinder Charge From Members
  Remittance to Government per cylinder sold
C
10/10/09
20
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
ASIAN EXPERIENCE: “C”
  CYLINDER EXCHANGE PROGRAM
  INDONESIA; kerosene-LPG-conversion program
  3kg Introduced since 2007 = 37.44million Units
  Govt. Aim = To Reduce Large Kerosene Subsidy
  Target = Household Consumers and Small-and-Medium
Businesses (UKM).
  Equivalent Kerosene Withdrawn = 3.26m kilolitres
  Target Distribution exceeded by 10%
  PHILIPINES;
  6million defective Cylinders Confiscated and Replaced at
Subsidized Rate to Rural Poor
  Exclusive filling of Cylinders owned, marked/branded
permanently by Marketer
  Cylinders funded through LPG revenue generated from VAT
10/10/09
21
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
  Massive Awareness Campaign: TV; Radio; Print!
  Campaign must be nationwide
  Costly Advertising; Huge Budget
  Promoting LPG as SAFE; AFFORDABLE;
ENVIRONMENTALLY FRIENDLY
  Public Education on S.A.F.E. USAGE
  Individual Company’s efforts are limited and
focused on target markets where interest lies
  Govt. has General Public Interest
  Public ‘trusts’ the Government; so Govt. Leads
Education in LPG
A
10/10/09
22
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
LPG
INDUSTRY
DPR
• Single Regulator to
Supervise Sector;
Drive Policy; Enforce
SAFE Standards;
license
• NLPGA To Develop
Standards in line with
WLPGA Codes; Train;
Certify Specialists;
Certify S.A.F.E
Appliances &
Distributors; Advise
DPR
• NLPGA:DPR Must
Work Hand in Hand
• Regulation is KEY to
Growth
NLPGA
R
10/10/09
23
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
AND ALL OTHER THINGS SHALL BE ADDED,…
  If Our C+A+R goes well then, Investments Will
flow into;
  Haulage Trucks (No Roads)
  Filling Plants
  Appliances and accesories
  Terminals; etc..
10/10/09
24
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
  Objective at beginning of Scheme
  Achievements
  Challenges
  Solution: LPG Almighty Formula
  ROLE OF NLPGA
  Way Forward
10/10/09
25
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
ROLE OF THE NLPGA: SA EXPERIENCE
  Develop Standards and Codes that are consistent
& Evolve with Technology
  Establish Training Institutes and Certifying All
Trained LPG Specialists for the Industry
  Certify LPG Distributors
  Certify SAFE Cylinders & Appliances
10/10/09
26
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
SA LPGA EXPERIENCE:
CERTIFICATION & TRAINING
CERTIFICATE of
COMPLIANCE
10/10/09
27
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
SA EXPERIENCE: DEALER CERT
10/10/09
28
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
SA EXPERIENCE – ROLE IN PUBLIC
AWARENESS
10/10/09
29
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
SA EXPERIENCE: LPG EDUCATION
10/10/09
30
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
  Objective at beginning of Scheme
  Achievements
  Challenges
  Solution: LPG Almighty Formula
  Role of NLPGA
  WAY FORWARD
10/10/09
31
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
WAY FORWARD…
10/10/09
32
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
CHINESE EXPERIENCE
  Guangdong undertook significant private
investment in LPG Investment
  Government funded 35m Cylinder Exchange
  Population: 120m
  LPG Imports / Consumption
Guangdong
imports/
consumes as
much LPG in a
month as Africa
does in a Year!!
Type of Investment Number off Capacity
Primary Terminals 7 487,000 tonnes
Secondary Terminals 35 98,000 tonnes
Bottling Plants 690 140,000 tonnes
1991 2007
413,000 tonnes 6 million tonnes
10/10/09
33
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
WHAT THE OFFTAKERS ARE DOING?
  Le Global C-Gas
  Cylinders; Distribution
  Chimons Gas
  Trucks; Cylinders; Terminal
  Harig - Gas Club
  Cylinders; New Filling Plants; Distribution; LPG
Terminal
  Linetrale – Gas Terminalling
  New FILLING Plants; LPG Terminal
  Hyson – Algasco/Navgas
  New 8,000Ton Terminal ETC Q1 2010
  All are individually designing Awareness
Campaigns
10/10/09
34
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
WHAT THE GOVT. SHOULD BE DOING?
  New Fiscal Regime
  Cylinders (Exchange) Fund Program
  Mass Awareness Campaign (NOA)
  Outlaw Firewood
  Unification of Regulation Codes; One Supervisor
as against 2
  NLNG Local Pricing of LPG
  Avoid subsidies to competing Fuels
  Removal of 5% VAT on Domestic LPG (Imported
LPG is not taxed!)
  Removal of 30-40% Duty on Steel Plate for
Cylinders
10/10/09
35
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk
END…,
10/10/09
36
NigerianLPGSummitbyDPR-Journey
sofar!byN.Shialsuk

More Related Content

Similar to DLPG Scheme: Achievements, Challenges and the Way Forward

The impact of gas flare commercialization program on the Nigerian domestic g...
The impact of gas flare  commercialization program on the Nigerian domestic g...The impact of gas flare  commercialization program on the Nigerian domestic g...
The impact of gas flare commercialization program on the Nigerian domestic g...Olawunmi Olatunji Msc. FMVA®
 
Developing Shale Gas Offshore
Developing Shale Gas OffshoreDeveloping Shale Gas Offshore
Developing Shale Gas OffshoreCyril Stahl
 
Small scale LNG operations
Small scale LNG operationsSmall scale LNG operations
Small scale LNG operationsEaswaran Kanason
 
Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0Dennis Habecker
 
Company profile anugerah wicaksono
Company profile anugerah wicaksonoCompany profile anugerah wicaksono
Company profile anugerah wicaksonoyannick99
 
2014 investor seminar asx
2014 investor seminar asx2014 investor seminar asx
2014 investor seminar asxSantos Ltd
 
Presentation given at CLSA investors' forum in Hong Kong
Presentation given at CLSA investors' forum in Hong KongPresentation given at CLSA investors' forum in Hong Kong
Presentation given at CLSA investors' forum in Hong KongSantos Ltd
 
FWP 2017 l Pierre PEYSSON, WPD Offshore France
FWP 2017 l Pierre PEYSSON, WPD Offshore FranceFWP 2017 l Pierre PEYSSON, WPD Offshore France
FWP 2017 l Pierre PEYSSON, WPD Offshore FranceBluesign
 
Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0Dennis Habecker
 
Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...
Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...
Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...Petrobras
 
Indo CBM 2014 Presentation - Mohd Radzif Mohamad FINAL
Indo CBM 2014 Presentation - Mohd Radzif Mohamad FINALIndo CBM 2014 Presentation - Mohd Radzif Mohamad FINAL
Indo CBM 2014 Presentation - Mohd Radzif Mohamad FINALRadzif Mohamed
 
Obijackson Group Corporate Profile
Obijackson Group Corporate ProfileObijackson Group Corporate Profile
Obijackson Group Corporate ProfileObijacksonGroup
 
August Newsletter - Affinity Small Scale LNG.pdf
August Newsletter  - Affinity Small Scale LNG.pdfAugust Newsletter  - Affinity Small Scale LNG.pdf
August Newsletter - Affinity Small Scale LNG.pdfAbrorieABE
 
The role of TPT in the export led growth strategy- Eastern Cape Region
The  role of TPT in the export  led growth strategy- Eastern Cape RegionThe  role of TPT in the export  led growth strategy- Eastern Cape Region
The role of TPT in the export led growth strategy- Eastern Cape RegionTransnet Port Terminals
 
Business proposal on gas delivery
Business proposal on gas deliveryBusiness proposal on gas delivery
Business proposal on gas deliveryFletcher Canto
 

Similar to DLPG Scheme: Achievements, Challenges and the Way Forward (20)

The impact of gas flare commercialization program on the Nigerian domestic g...
The impact of gas flare  commercialization program on the Nigerian domestic g...The impact of gas flare  commercialization program on the Nigerian domestic g...
The impact of gas flare commercialization program on the Nigerian domestic g...
 
Developing Shale Gas Offshore
Developing Shale Gas OffshoreDeveloping Shale Gas Offshore
Developing Shale Gas Offshore
 
Small scale LNG operations
Small scale LNG operationsSmall scale LNG operations
Small scale LNG operations
 
Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0
 
Company profile anugerah wicaksono
Company profile anugerah wicaksonoCompany profile anugerah wicaksono
Company profile anugerah wicaksono
 
2014 investor seminar asx
2014 investor seminar asx2014 investor seminar asx
2014 investor seminar asx
 
Presentation given at CLSA investors' forum in Hong Kong
Presentation given at CLSA investors' forum in Hong KongPresentation given at CLSA investors' forum in Hong Kong
Presentation given at CLSA investors' forum in Hong Kong
 
Africa oil and gas
Africa oil and gasAfrica oil and gas
Africa oil and gas
 
KNPC-CFP
KNPC-CFPKNPC-CFP
KNPC-CFP
 
FWP 2017 l Pierre PEYSSON, WPD Offshore France
FWP 2017 l Pierre PEYSSON, WPD Offshore FranceFWP 2017 l Pierre PEYSSON, WPD Offshore France
FWP 2017 l Pierre PEYSSON, WPD Offshore France
 
Tops april2015
Tops april2015Tops april2015
Tops april2015
 
saudi_arabia_baixa
saudi_arabia_baixasaudi_arabia_baixa
saudi_arabia_baixa
 
Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0Presentation qp induction presentation asst5_25_sep11_vers d0
Presentation qp induction presentation asst5_25_sep11_vers d0
 
Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...
Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...
Presidente José Sergio Gabrielli de Azevedo. Apresentação para The Brazil-Tex...
 
Indo CBM 2014 Presentation - Mohd Radzif Mohamad FINAL
Indo CBM 2014 Presentation - Mohd Radzif Mohamad FINALIndo CBM 2014 Presentation - Mohd Radzif Mohamad FINAL
Indo CBM 2014 Presentation - Mohd Radzif Mohamad FINAL
 
Obijackson Group Corporate Profile
Obijackson Group Corporate ProfileObijackson Group Corporate Profile
Obijackson Group Corporate Profile
 
August Newsletter - Affinity Small Scale LNG.pdf
August Newsletter  - Affinity Small Scale LNG.pdfAugust Newsletter  - Affinity Small Scale LNG.pdf
August Newsletter - Affinity Small Scale LNG.pdf
 
The role of TPT in the export led growth strategy- Eastern Cape Region
The  role of TPT in the export  led growth strategy- Eastern Cape RegionThe  role of TPT in the export  led growth strategy- Eastern Cape Region
The role of TPT in the export led growth strategy- Eastern Cape Region
 
BunkersUnlimited
BunkersUnlimitedBunkersUnlimited
BunkersUnlimited
 
Business proposal on gas delivery
Business proposal on gas deliveryBusiness proposal on gas delivery
Business proposal on gas delivery
 

DLPG Scheme: Achievements, Challenges and the Way Forward

  • 1. DLPG SCHEME: THE JOURNEY SO FAR! Presentation By Mr. Norbert Shialsuk to the 1st Nigerian LPG Summit Organized by The Department of Petroleum Resources on the 12th & 13th October 2009 @ ICC Abuja
  • 2. CONTENT   OBJECTIVE AT BEGINNING OF SCHEME   Achievements   Challenges   Solution: LPG Almighty Formula   Role of NLPGA   Way Forward 10/10/09 3 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 3. OBJECTIVES OF THE DLPG SCHEME   Supply LPG From Nigerian Production in Bonny   Which was impossible prior to now   Bridge Supply Logistic Gap btw Bonny & Lagos   Eradicate Scarcity of LPG   Reduce Hiked Prices; Make More Affordable   Improve Infrastructural Imbalance   Reintroduce LPG and Create Awareness 10/10/09 4 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 4. BRIDGING THE LOGISTIC GASP… Bonny River Terminal BW Saga in STS with LPG/C Blue Gas 10/10/09 5 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 5.   Objective at beginning of Scheme   ACHIEVEMENTS   Challenges   Solution: LPG Almighty Formula   Role of NLPGA   Way Forward 10/10/09 6 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 6. ACHIEVEMENTS   Retail Price Dip – from N10,000 > 2200 per 12.5kg   Market Stability   Sustained Supplies; cutting scarcity   Restored Confidence attracting New Investments in LPG   New Filling Plants Springing Up   Old Plants Revived   Customers more sensitized; Expectant   Fruitful Partnership between NLNG and the 6 Off-takers 10/10/09 7 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 7.   Objective at beginning of Scheme   Achievements   CHALLENGES   Solution: LPG Almighty Formula   Role of NLPGA   Way Forward 10/10/09 8 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 8. CHALLENGES: BERTHING DELAYS STS OPS VESSEL LOAD DATE DISCHA RGE DATE TIME INV. DATE 20 Blue Gas 03-10-08 17-10-08 14 Days 02-11-09 21 Blue Gas 18-10-08 29-10-08 11 Days 17-11-09 22 Blue Gas 29-10-08 14-11-08 14 Days 28-11-09 23 Blue Gas 18-11-08 25-11-08 8 Days 17-12-09 27 Mayfair 20-03-09 08-04-09 20 Days 19-04-09 28 Mayfair 21-04-09 14-05-09 24 Days 20-05-09 29 Super League 08-05-09 11-06-09 34 Days 07-06-09 30 Mayfair 27-05-09 29-06-09 33 Days 26-06-09 31 Super League 20-06-09 20-08-09 61 Days 19-07-09 36 Mayfair 29-07-09 31-08-09 33 Days 28-08-09 40 Mayfair 03-09-09 17-09-09 15 Days 02-10-09 10/10/09 9 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 9. CHALLENGES: MARKET INSENSITIVITY   OPIS Mont Belvieu Upward Trend   Local Ex-Depot Prices Remain Constant   Retail Prices on an Upward Trend due to speculation by Rogue Traders/Distributors   Off-takers taking all the RISKS; Rogue Street Traders Taking all the PROFIT (See next Slide,..) 10/10/09 10 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 10. LAST MILE BOTTLENECK = CYLINDERS   However, bottleneck is no in cylinders:   Even though Offtakers sell ex-Apapa depot at N1,200 and ex-plant at N1,500 – N1,750, road side retailers still sell at approx. N2,500 – N3,500 per cylinder!   Roadside and Retail Gross Margins are 70–100% Today!! 11 Cylinder Price Ex Plant
  • 11. SHIFT IN VALUE CHAIN FROM 2008 TO 2009 12
  • 12. CHALLENGES: CYLINDERS > DEPTH   Nigeria’s Population: 140 million   Nigeria’s Cylinder Population   All sizes: Less than 1 million (Approx. 500,000)   Capacity 500,000cylinders x 12.5kg = 6,250,000kg   6,250,000kg = 6,250tons   Annual Capacity = 6,250t * 12months = 75,000tons (Assuming Users fill once a month)   Shallow Market   Focus Investments on Cylinders; Distribution  To ACHHIEVE 1MTPA? NIGERIA REQUIRES 40M CYLINDERS!  Equivalent to N200bn 10/10/09 13 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 13. MARKET DEPTH: SA   S. African Population: 25 million   S. Africa cylinder population   Large Cylinders (9kg & above): 5.5 million   Small Cylinders (below 6kg): 7 million   TOTAL 12,5M CYLINDERS   Local Refinery Supply 370,000tons in 2007 10/10/09 14 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 14. CHALLENGES: ROGUE TRADERS   Short Filling   Rusty Cylinders   Price Hiking   Shoddy Practices: HSE Concerns   Regulatory Oversight Not Adequate at this level 10/10/09 15 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 15. CHALLENGES: ILIQUIDITY   Constrained Cash Flows Due to Huge Logistic Costs   Limited Cash Available for Investment in Infrastructure   No Bank Funding 10/10/09 16 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 16. CHALLENGES: OTHER   Disincentive to Investment   Dual licensing/Regulatory Agencies – DPR/SON   SON Certification Hurdles 10/10/09 17 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 17.   Objective at beginning of Scheme   Achievements   Challenges   SOLUTION: LPG ALMIGHTY FORMULA   Role of NLPGA   Way Forward 10/10/09 18 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 18. LPG ALMIGHTY FORMULA…, C A R X2 Where: C = Cylinders A = Awareness R = Regulation X2 = Exponential Growth in LPG 10/10/09 19 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 19.   Massive Injection of Cylinders   40 Million Cylinders Required to reach 1MTPA   Private Investment or   Government Funding   IF Private Investment   Then Specialization of Cylinder Valves   Protection of Investment; Guaranteed ROI   IF GOVT. FUNDING   Then Standard Valves Remain   NLPGA Recoups Cylinder Charge From Members   Remittance to Government per cylinder sold C 10/10/09 20 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 20. ASIAN EXPERIENCE: “C”   CYLINDER EXCHANGE PROGRAM   INDONESIA; kerosene-LPG-conversion program   3kg Introduced since 2007 = 37.44million Units   Govt. Aim = To Reduce Large Kerosene Subsidy   Target = Household Consumers and Small-and-Medium Businesses (UKM).   Equivalent Kerosene Withdrawn = 3.26m kilolitres   Target Distribution exceeded by 10%   PHILIPINES;   6million defective Cylinders Confiscated and Replaced at Subsidized Rate to Rural Poor   Exclusive filling of Cylinders owned, marked/branded permanently by Marketer   Cylinders funded through LPG revenue generated from VAT 10/10/09 21 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 21.   Massive Awareness Campaign: TV; Radio; Print!   Campaign must be nationwide   Costly Advertising; Huge Budget   Promoting LPG as SAFE; AFFORDABLE; ENVIRONMENTALLY FRIENDLY   Public Education on S.A.F.E. USAGE   Individual Company’s efforts are limited and focused on target markets where interest lies   Govt. has General Public Interest   Public ‘trusts’ the Government; so Govt. Leads Education in LPG A 10/10/09 22 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 22. LPG INDUSTRY DPR • Single Regulator to Supervise Sector; Drive Policy; Enforce SAFE Standards; license • NLPGA To Develop Standards in line with WLPGA Codes; Train; Certify Specialists; Certify S.A.F.E Appliances & Distributors; Advise DPR • NLPGA:DPR Must Work Hand in Hand • Regulation is KEY to Growth NLPGA R 10/10/09 23 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 23. AND ALL OTHER THINGS SHALL BE ADDED,…   If Our C+A+R goes well then, Investments Will flow into;   Haulage Trucks (No Roads)   Filling Plants   Appliances and accesories   Terminals; etc.. 10/10/09 24 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 24.   Objective at beginning of Scheme   Achievements   Challenges   Solution: LPG Almighty Formula   ROLE OF NLPGA   Way Forward 10/10/09 25 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 25. ROLE OF THE NLPGA: SA EXPERIENCE   Develop Standards and Codes that are consistent & Evolve with Technology   Establish Training Institutes and Certifying All Trained LPG Specialists for the Industry   Certify LPG Distributors   Certify SAFE Cylinders & Appliances 10/10/09 26 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 26. SA LPGA EXPERIENCE: CERTIFICATION & TRAINING CERTIFICATE of COMPLIANCE 10/10/09 27 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 27. SA EXPERIENCE: DEALER CERT 10/10/09 28 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 28. SA EXPERIENCE – ROLE IN PUBLIC AWARENESS 10/10/09 29 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 29. SA EXPERIENCE: LPG EDUCATION 10/10/09 30 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 30.   Objective at beginning of Scheme   Achievements   Challenges   Solution: LPG Almighty Formula   Role of NLPGA   WAY FORWARD 10/10/09 31 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 32. CHINESE EXPERIENCE   Guangdong undertook significant private investment in LPG Investment   Government funded 35m Cylinder Exchange   Population: 120m   LPG Imports / Consumption Guangdong imports/ consumes as much LPG in a month as Africa does in a Year!! Type of Investment Number off Capacity Primary Terminals 7 487,000 tonnes Secondary Terminals 35 98,000 tonnes Bottling Plants 690 140,000 tonnes 1991 2007 413,000 tonnes 6 million tonnes 10/10/09 33 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 33. WHAT THE OFFTAKERS ARE DOING?   Le Global C-Gas   Cylinders; Distribution   Chimons Gas   Trucks; Cylinders; Terminal   Harig - Gas Club   Cylinders; New Filling Plants; Distribution; LPG Terminal   Linetrale – Gas Terminalling   New FILLING Plants; LPG Terminal   Hyson – Algasco/Navgas   New 8,000Ton Terminal ETC Q1 2010   All are individually designing Awareness Campaigns 10/10/09 34 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk
  • 34. WHAT THE GOVT. SHOULD BE DOING?   New Fiscal Regime   Cylinders (Exchange) Fund Program   Mass Awareness Campaign (NOA)   Outlaw Firewood   Unification of Regulation Codes; One Supervisor as against 2   NLNG Local Pricing of LPG   Avoid subsidies to competing Fuels   Removal of 5% VAT on Domestic LPG (Imported LPG is not taxed!)   Removal of 30-40% Duty on Steel Plate for Cylinders 10/10/09 35 NigerianLPGSummitbyDPR-Journey sofar!byN.Shialsuk