Vision & Strategy
LiquifiedPetroleum Gas (LPG) is a proven fuel source for cooking, and identified by international organizations as the transitional solution for Africa’s cleaner urban cooking needs now and in the future.
We aim to build the smartest and most efficient off-grid network for clean cooking in Africa’s urban areas.
Proven new LPG business models from Asia and South America in combination with successful pay-as-you-go roll-outs in key LPG markets in Africa support our vision.
PAL Energy aims to make LPG more accessible to a larger group of potential consumers by driving efficiencies in the entire LPG supply chain. We implement a direct to end-user, fully integrated business model in urban areas. Our regional expansion strategy (“selective” buy & build) will target companies where this business model can be implemented over time.
Objective: Switching 5 million customers to LPG and building a 1 million mT company in the next decade; providing our long term investors with a compelling business case.
Switching 5 million end-users to LPG in Africa’s urban areas is the first step in the energy transition. Business extensions to more rural areas, other energies (e.g. solar, natural gas) or other products can be implemented when the customer base is successfully established.
Global LPG demand surpassed 300 million tonnes in 2017 which can be seen as a milestone in the global LPG market. The bulk from the recent growth comes from domestic/residential demand in developing countries, a further indication that LPG is becoming an everyday source of energy for more and more people across the globe. The milestone furthermore reflects the strong growth that the sector has seen over the past decade -in 2007 total demand was 225 million tonnes, meaning annual demand growth has averaged more than 7 million tonnes per year during that period. Over half of that growth came from residential (largely for cooking) demand in Asia-Pacific. Globally, still 28% of total LPG demand is consumed as feedstock by the petrochemical sector.
African LPG demand (13 million tonnes) grew by 3% but demand below the Sahara grew with 7%. Consumption patterns on the continent differ significantly between mature markets at the Mediterranean coast and underdeveloped markets in Sub-Saharan Africa. Algeria, Morocco, Tunisia and Egypt together account for 72% of African LPG demand while these countries only represent 16% of African population. In Morocco, average LPG demand per capita is 70kg per capita while at the same time 100 million Ethiopians don’t consume any LPG at all.
LPG adoption depends mainly on price competitiveness vis á vis other fuels like charcoal and kerosene and availability of supply. Nigerian consumption has grown 20% per annum since 2016 because of stable supply from imports as a result of new import capacity in Lagos. In West-Africa Kenyan consumption grows at 10% per year as a result of Government stimulus (VAT removed from LPG cylinders).
As a result, and because of population and GDP growth, demand in some Saharan African countries will have doubled by 2030.