Sub-Saharan Africa gets $2.2bn for clean cooking

  • Spanish Market: LPG
  • 14/05/24

Governments, financial institutions and private-sector firms made a string of funding pledges at this week's IEA summit, write Peter Wilton and Matt Scotland

Public and private-sector pledges amounting to $2.2bn to provide access to clean cooking fuels, including LPG, in sub-Saharan Africa by 2030 were announced at the IEA's Summit on Clean Cooking in Africa in Paris on 14 May.

Governments, financial institutions and private-sector companies made a string of funding pledges at the event, which attracted heads of state from Norway, Tanzania, Togo and Sierra Leone, as well as 21 ministers.

From the public sector, the EU has earmarked €400mn ($432mn) for clean cooking under an existing EU-Africa investment package. Norway's prime minister Jonas Gahr Store added $50mn to this commitment, while French, Danish and UK ministers pledged €100mn, $72mn and £8.5mn ($10.7mn), respectively, under various clean cooking initiatives across the continent to 2030. The US will add a minimum of $40mn in the next two years alone.

Private-sector pledges were led by energy firms active in the region, many of which operate in the LPG sector. Trading company Vitol committed $550mn towards infrastructure, LPG cylinders, distribution and cookstoves across the firm's African operations, while Italy's Eni pledged $300mn to lift the number of beneficiaries of its clean cooking programme in Africa from 500,000 to 10mn by 2027 and 20mn by 2030.

TotalEnergies will invest $100mn in additional LPG production and associated local distribution in Uganda, and $400mn across Africa and India in developing LPG cooking markets, chief executive Patrick Pouyanne said. LPG is a "pragmatic, existing enabler for access to clean cooking", he said.

Africa50 — a financial institution founded by African governments and the African Development Bank (AFDB) to mobilise investment in infrastructure in the continent — pledged $500mn of finance for LPG infrastructure projects, according to chief executive Alain Ebobisse. This is on top of a previous commitment from the AFDB, announced at the UN's Cop 28 climate summit in November, to allocate 20pc of its energy lending budget — worth around $2bn over the next 10 years — to clean cooking. The bank has also urged local governments in Africa to allocate 5pc of their current energy investments to clean cooking, which would raise another $3.5 bn/yr, AFDB president Akinwumi Adesina said.

LPG plays a crucial role in the IEA's vision for clean cooking in Africa. Under the Paris-based agency's "access for all" policies scenario, around 45pc of the transition will be to LPG by 2030. The IEA wants to mobilise $4 bn/yr of investment in clean cooking in sub-Saharan Africa, 80pc of which will be for end-user equipment and 20pc for infrastructure, a goal that it says is achievable now. The region can look to emulate successful LPG transitions in Brazil, India, Indonesia and Ghana, Tanzanian president Samia Suluhu Hassan said.

IEA executive director Fatih Birol said he hopes the world will look back on the summit "as the turning point" for tackling the problem.


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12/06/24

US Fed signals one rate cut this year

US Fed signals one rate cut this year

Houston, 12 June (Argus) — The US Federal Reserve kept its target interest rate unchanged at a 23-year high today while officials signaled they expect to make only one quarter-point rate cut later this year. The Fed board and policymakers, in their latest economic projections, expect the target rate range will end 2024 near a midpoint of 5.1pc, compared with the 4.6pc midpoint projected in March. That implies one quarter-point cut, down from three possible cuts penciled-in previously. "We do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably" towards the Fed goal of 2pc, Fed chairman Jerome Powell said after the meeting. "As the economy evolves, appropriate assessments of the policy path will adjust in order to best promote our maximum employment and price stability goals." The Fed's Federal Open Market Committee (FOMC) held the federal funds target rate unchanged at 5.25-5.5pc. It was the sixth consecutive meeting in which the Fed held rates steady following 11 increases from March 2022 through July last year in the most aggressive hiking campaign in four decades. The decision to keep rates steady was widely expected. CME's FedWatch tool, which tracks fed funds futures trading, had assigned a 99pc probability to the Fed holding rates steady today. The FedWatch tool had earlier signaled two rate cuts later this year, but following a better-than-expected inflation report this morning, FedWatch is now indicating three possible rate cuts, beginning in September. The Fed's economic projections see core Personal Consumption Expenditures inflation, the Fed's favorite measure of inflation, ending 2024 at a median forecast of 2.8pc from a prior forecast for 2.6pc. Policymakers see inflation falling to a median 2.3pc next year. The outlook for the unemployment rate for the end of 2024 remained unchanged at 4pc. Policymakers expect gross domestic product (GDP) growth to end the year at 2.1pc, unchanged from prior projections. The latest policy meeting comes as the Consumer Price Index (CPI) eased to an annual 3.3pc in May , down from 3.4pc in April, the Labor Department reported earlier today. Inflation had ticked up to 3.5pc in March from 3.1pc in January, prompting the Fed to turn more cautious about beginning its rate cuts. US job growth has surprised to the upside and continues to top pre-Covid levels. GDP growth slowed to a 1.3pc annual rate in the first quarter, from 3.4pc in the fourth quarter of 2023. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US inflation eases to 3.3pc in May as Fed meets


12/06/24
12/06/24

US inflation eases to 3.3pc in May as Fed meets

Houston, 12 June (Argus) — US consumer inflation eased slightly in May for a second month, a sign Federal Reserve rate hikes are having some success in reining in inflation pressures after a spurt of gains earlier this year. The consumer price index (CPI) slowed to an annual 3.3pc in May from 3.4pc in April, the Bureau of Labor Statistics reported today. So-called core inflation, which strips out volatile food and energy prices, increased by 3.4pc over the past year, the lowest reading in three years, from 3.6pc through April. The energy index rose by an annual 3.7pc, compared to a 2.6pc rise in April, while the gasoline index rose by 2.2pc versus 1.2pc in April. Energy services rose by an annual 4.7pc. Headline inflation had ticked up from 3.1pc in January amid stronger than expected economic data, prompting the Federal Reserve to delay widely expected rate cuts as it pledged it needed to see more evidence of a "sustained" slowing in inflation. The inflation report, which came in slightly under economists' median forecasts, comes hours ahead of a Federal Reserve policy announcement today expected to reveal projections on whether Fed members still expect to begin cutting the target rate this year and by how much. Fed policymakers today are widely expected to keep their target rate unchanged. The Fed hiked its target rate to a 23-year high of 5.25-5.5pc in July 2023 and has kept it there since as it has battled to bring down inflation that hit a high of 9.1pc in June 2022. After the report, the CME's FedWatch tool signaled a 73pc probability that the Fed will cut its target rate in September from near 53pc odds Tuesday. CPI was unchanged from the prior month, the first flat monthly reading in two years, following a 0.3pc monthly gain in April and 0.4pc gains in the prior two months. Core CPI was up by 0.2pc for the month after a monthly gain of 0.3pc in April. The energy index fell 2pc in May on the month after rising 1.1pc the prior month. The food index rose by 0.1pc in May after being unchanged the prior month. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil LPG usage review due in Nov


07/06/24
07/06/24

Brazil LPG usage review due in Nov

Sao Paulo, 7 June (Argus) — Brazil's 33-year-old restrictions on LPG usage are one step closer to ending as hydrocarbons regulator ANP plans to deliver a regulatory impact analysis (RIA) on changing the rules by 7 November or sooner. Ending the restrictions via a new regulation — which was discussed in a broadcast meeting of government agencies and industry groups in the lower house of congress this week — could increase Brazil's LPG demand by 5pc , according to LPG association Sindigas. ANP added the RIA to its agenda following pressure from many sides, including Sindigas, LPG distributors, industry and even an official request from ministry of mines and energy (MME). The government banned certain uses of LPG in 1991 when the first Gulf War led to a significant increase in fuel prices. At the time Brazil relied on imported LPG as a primary cooking fuel, which was heavily subsidized, so there was concern the war would lead to prolonged LPG shortages. The restrictions barred its use in automotive and other engines except for forklifts and industrial cleaning equipment. It is also illegal for saunas, boilers and pool heating, except for medicinal purposes. LPG for cooking is no longer subsidized by the government and prices are largely set on the open market, although 13kg cylinder prices are still influenced by state-controlled Petrobras. Although restrictions on LPG use were established by law, there is an understanding from the federal Attorney General's Office that just a resolution from ANP would be sufficient to allow other uses. The review of the LPG restrictions are part of the ANP mission to give Brazil freedom of choice on energy sources for different applications based on their availability and cost, eliminating market barriers, said Deivson Matos Timbó, general coordinator for market monitoring at the MME. Currently, LPG represents just 3.2pc of the national energy use — less than firewood and natural gas. "Once the market develops it will mitigate any concerns of supply and demand," said Pedro João Zahran Turqueto, distributor Copa Energia's vice president of operations and strategy. Congressman Beto Pereira, who organized the meetings this week, said LPG has the potential to be a power generation fuel in remote areas, as well as a backup fuel for intermittent renewable energy generation, with lower transportation and storage costs than liquid hydrocarbons. The meeting in the lower house included representatives from ANP, MME, Brazil's energy research company EPE, LPG distributor Copa Energia, LPG association Sindigás and the Federal University of Mato Grosso do Sul state (UFMS), located in the center-western region. By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LPG World editorial: Force and momentum


04/06/24
04/06/24

LPG World editorial: Force and momentum

An African LPG roadmap is to be launched with the aim of fostering a greater understanding of what is needed in specific locations around the continent London, 4 June (Argus) — Little clarity has emerged yet on how all of the funding pledges, initiatives and projects announced at the IEA's African clean cooking summit last month will be mobilised and monitored. But clean cooking's growing standing on the global agenda means it is likely to feature prominently at the forthcoming G20 and Cop 29 meetings on 18-19 and 11-22 November, hopefully preventing momentum from being lost. The World Liquid Gas Association's (WLGA) LPG Week in Cape Town, South Africa, will straddle both events over 18-22 November, and will have a strong clean cooking bent. The WLGA has collaborated with the IEA and other stakeholders in orchestrating last month's summit, and will continue to do so in the various endeavours arising in its aftermath. With this in mind, the association has established the Cooking For Life Africa Task Force (CFLA) to represent the industry, pooling the likes of TotalEnergies, Equinor, Petredec, Oryx Energies and S&P Global. The CFLA will communicate what the LPG industry is doing and the benefits it is providing in the region, WLGA chief advocacy officer Michael Kelly says. One of the force's first tasks will be to develop an "African LPG Roadmap", to be launched at Cop 29 in Baku, Azerbaijan. Primarily for policy makers and development agencies, the roadmap will establish the LPG market conditions in each sub-Saharan African country, "highlighting things like the number of cylinders, the regulatory architecture, challenges such as any infrastructure bottlenecks", Kelly says. The hope is that through better analysis and information sharing, a greater understanding of what is needed in specific locations will emerge, allowing investment to be channelled in the right direction. One of the ideas is to split sub-Saharan African countries into "three buckets", the first being the "low-hanging fruit" primed for LPG growth. "Maybe they're missing some infrastructure pieces, but the government knows what they are and is making investments, global players are willing to put their money in, and the population aspires to have LPG," Kelly says. The second bucket is more "transitional", with small LPG markets in urban centres but very little outside of this, while the third are those "where growth is going to take a while to take place". The roadmap will not be static, nor will the CFLA be, with plans to grow the task force and some WLGA members already showing an interest in joining, according to Kelly. The next steps will be to work on messaging prior to the G20 meeting in Rio de Janeiro, Brazil, and at Cop 29, both of which are expected to have clean cooking high on the agenda. Kelly expects this to also be the case, possibly to an even greater degree, at Cop 30 in Belem, Brazil, and at the G20 meeting in South Africa a year later. Unequivocal endorsements One CFLA member, TotalEnergies — which distributes LPG in 22 African countries — has signalled its intent to spread clean cooking to hundreds of millions of Africansduring a recent WLGA webinar. "The IEA and the World Bank have unequivocally endorsed LPG as a crucial component of clean cooking… beyond 2030," the major's head of LPG business development Monzur Siddiqui says. For Siddiqui, three pillars are needed to support development of LPG markets in the region — the establishment of appropriate and properly enforced regulations, the affordability of LPG to consumers and the sustainability of the distribution models. The main growth enabler for fellow member Petredec's downstream head James Bullen will be infrastructure. The company is well versed in the issue, having set up the Mauritius and Richards Bay LPG terminals serving east Africa in 2014 and 2020. Investing in large-scale distribution systems has historically been lacking but if done right, can help LPG use spread more widely, he says — provided LPG is economically viable, always available and in the locations it is needed the most. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Southern Brazil's LPG market recovers after floods


04/06/24
04/06/24

Southern Brazil's LPG market recovers after floods

Distributors drew on stocks to prevent shortages after the fatal floods, but commercial and industrial demand is yet to fully rebound, writes Betina Moura Sao Paulo, 4 June (Argus) — LPG supply and distribution in Brazil's Rio Grande do Sul state have largely returned to normal following massive flooding in May, but demand may take some time to return fully. The LPG market in the southern state was operating at about 90pc capacity in late May after heavy rains since the end of April devastated the region and heavily disrupted flows, according to mines and energy minister Alexandre Silveira. LPG is a basic need in Brazil as it is widely used as a primary cooking fuel — of the country's 7.6mn t/yr of consumption, about 68pc comes from the residential sector. The emergency in southern Brazil reached a critical moment when the main producer of LPG in the state, the 32,000 m³/d Alberto Pasqualini Refinery (Refap) operated by state-controlled Petrobras, was on the verge of shutting down in early May because of flooding around the complex, Silveira says. Copa Energia, the largest LPG company in the southern region with one-third of the market share, says the situation in Rio Grande do Sul has yet to fully recover but it is now able to supply 100pc of demand in the area. Copa Energia's main operations centre in Canoas on the outskirts of Rio Grande do Sul's state capital Porto Alegre is closed, but the company continues to deliver to its residential, commercial and industrial customers at normal rates after adopting contingency plans, it says. But images in local media of empty floating LPG cylinders being swept away by floodwaters in Canoas symbolised the level of disruption. Copa Energia in early May began sourcing LPG from less-affected cities such as Pelotas and Passo Fundo, and in the neighbouring states of Santa Catarina and Parana. Distributors were supplying around 10pc less LPG than normal in the first few days of May but were able to draw on stocks to meet demand and prevent a shortage. Demand for 13kg cylinders ― mainly used for cooking ― was rebounding by late May but had yet to reach typical levels, according to Brazilian LPG distributors' association Sindigas. The Refap refinery is operating at slightly lower loads than planned, at 82pc of capacity and a nominal load of 26,000 m³/d, Petrobras said in late May. LPG production at the facility has been stable over the last few days at around 1,700 t/d, the firm said. Brazilian oil regulator ANP has meanwhile assured customers that no reports of LPG shortages have been made, which is reflected in the official price for a 13kg cylinder remaining roughly stable at 104.10 reals ($20.20) on average over 19-25 May, compared with R105.27 between 28 April and 5 May. Narrow escape The outlook for the LPG sector in the region seems positive, but some market participants say it was a narrow escape considering the enormous impact the floods had, including at the Refap refinery. Generators had to be quickly brought in at Refap to keep it operational as problems with water intake began to affect its electricity supply, Silveira said during a visit to Porto Alegre on 28 May. The flooding also led to labour shortages as employees could not travel, although "we registered situations of pure heroism with workers leaving their family still in fragile situations to show up and keep distribution going", Sindigas president Bandeira de Mello says. LPG deliveries are increasing in the region, with the supply coming from storage sites in other states such as Sao Paulo, Parana and Santa Catarina, Sindigas says. Demand for bulk LPG from the commercial and industrial sectors, including agribusiness, is still heavily suppressed compared with cooking demand, but gradually picking up again. As of 31 May, the floods have impacted more than 2.3mn residents, with 169 fatalities, 806 injured and 44 missing, according to the government. Brazil LPG fundamentals Rio Grande do Sol LPG infrastructure Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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