11 th UNCTAD African Oil and Gas, Trade and Finance Conference & Exhibition

1. LP GAS The Obvious Alternative For AfricaMichael Kelly, Director, Market Development,World LP Gas Association 11th UNCTAD African Oil and Gas, Trade and Finance Conference & Exhibition Nairobi 23-25 May 2007 NOT AN OFFICIAL UNCTAD RECORD

2. Agenda • The World LP Gas Association at a glance2. Why LP Gas 3. Innovations4. LP Gas as a Fuel for Rural Development5. Conclusions

3. Agenda • The World LP Gas Association at a glance2. Why LP Gas 3. Innovations4. LP Gas as a Fuel for Rural Development5. Conclusions

4. WLPGA members >155 members headquartered in 50 countries > Representing the leading companies Board of Directors • Industry Leaders Industry Council • Top LP Gas Companies WLPGA Staff The WLPGA As the authoritative, global voice for LP Gas, the WLPGA promotes the use of LP Gas worldwide to foster a cleaner, healthier and more prosperous world.

5. Apowerful Industry Association

6. The WLPGA • We are a growing network of members representing the major LP Gas companies across the world • We are influential – Partnerships with key global organisations such as the World Bank and the UNDP • We are credible – Officially recognized within the UN Economic & Social Council • We are informative – publishing essential information for the use of members • We are the unique global organisation representing the interests of the full LP Gas value chain from producer to distributor

7. The WLPGA – Facilitating market development • Partnering with global institutions to prove new business models • Smart subsidies in South Africa • Microfinance in Morocco • Lobbying governments for fair taxation: • Korean and German Autogas • Sharing best practices • Publications on business and policy recommendations

8. The WLPGA – Exchanging best practices and innovation • Two active Member-driven networks: • Global Technology Network (GLOTEC) • Global Autogas Industry Network (GAIN) • Revamped and informative web site: • Exclusive information in “Members-only” section • Annual Forum • 20th World LP Gas Forum 24-26 2007 Cape Town • The unique global event in the industry which this year will feature the “LP Gas for African Development Conference” on 24 October.

9. Agenda • The World LP Gas Association at a glance2. Why LP Gas 3. Innovations4. LP Gas as a Fuel for Rural Development5. Conclusions

10. Fuel for Development – the context • Energy is vital for socio-economic development • 1.6 billion people in the world have no access to electricity and a further 2.4 billion people depend on traditional fuels for cooking and heating • Access to modern energy strengthens the three pillars of sustainable development: Economy; Society; Environment • LP Gas is an immediately available modern energy at low infrastructure cost • LP Gas is a popular household fuel in many countries and most markets are growing • Brazil: over 90 % households use LP Gas • India: 66 millions households (90 % urban, 33 % rural areas covered)

11. Access to Modern Energy The landmark World Energy Council 2000 Statement “Energy for Tomorrow’s World” laid out 3 critical prescriptions for achieving a sustainable energy future • Availability • Acceptability • Accessibility

12. LP Gas is an Available Energy source 400 Oceania 350 60% increase FSU / E Europe 300 Africa 250 West Europe Supply /M Tonnes 200 Asia 150 Latin America 100 Middle East 50 North America 0 1995 2000 2002 2003 2004 2005 2010 2030 Source: WLPGA Statistical Review of Global LP Gas Purvin & Gertz

13. LP Gas is an Acceptablealternative …because it’s a clean fuel • It burns cleanly • No smoke or residual particulate matter • And, relatively low pollutant emissions

14. LP Gas has a low GHG footprint Fuel Cycle CO2-Equivalent Emissions for Space Heating and Water Heating (g/Mbtu heat)

15. LP Gas and reduced indoor air pollution Did you know that… • … smoke from indoor cooking fires kills 1.6 million (mainly small children) every year • … smoke in the home kills more people than malaria does, and almost as many as unsafe water and sanitation • … smoke in the home is the fourth greatest cause of death and disease in the world’s poorest countries

16. LP Gas and reduced indoor air pollution According to the landmark 2006 WHO study “Fuel For Life, Household Energy and Health” • WHO have highlighted LP Gas as the cost effective solution for reducing pollution from cooking fuel in the developing world • “… investing US$ 13 billion per year to halve, by 2015, the number of people worldwide cooking with solid fuels by supplying them with LP Gas shows a payback of US$ 91 billion per year” • “Government leadership in developing policies for successful market expansion of LP Gas is essential”

17. Significant improvements can be brought by LP Gas Graph shows relative pollutant emissions per meal 100.0 10.0 1.0 0.1 Crop Biogas LPG Kerosene Wood Roots Dung Residues 0.1 1.0 3 19 22 60 64 CO 0.3 1.0 4.2 17 18 32 115 Hydrocarbons 2.5 1.0 1.3 26 30 124 63 PM • Almost no emissions • Energy efficiency of 90% • 27mj/1kg LP Gas CO Hydrocarbons PM

18. LP Gas delivers Rapid Accessibility Because it’s portable: • Bottles can be can be stored indefinitely • Easily transported • Used virtually anywhere -- from urban centres to remote regions • When and where costly, grid-based energy services are unavailable

19. The Transition to Modern Energy Household energy use • Traditional fuels (e.g. wood, charcoal) still dominate household energy use • Transition to modern fuels central to sustainable development • Economic development doesn’t drive energy usage rather, it may be stimulated by energy provision (UNDP) Electricity Natural gas Coal/kerosene LP Gas Traditional fuels Time, economic development

20. LP Gas allows for incremental development Stage 3: LP Gas bulk tank, fuelling stove, refrigerator, water boiler and generator Stage 2: LP Gas cylinder outside, piped in to fuel stove, refrigerator and light Stage 1: LP Gas cylinder inside feeding stove

21. TYPICAL APPLIANCE ENERGY USAGE APPLIANCE ENERGY CONSUMPTION / Watts Minimal Lighting 150 Additional Lighting 400 Radio 6 Television 100 Refrigerator 90 V.C.R. 50 Sewing Machine 95 Electric Stove 1 500 Electric Kettle 1 500 Home Heating 2 000 – 5 000 Meeting Energy Needs Many domestic, thermal energy needs can not be met by off-grid electrical power

22. Agenda • The World LP Gas Association at a glance2. Why LP Gas3. Innovations4. LP Gas as a Fuel for Rural Development5. Conclusions

23. LP Gas partnering with renewable energy

24. LP Gas supports a wide range of services • Commercial services • Manufacturing, metal-works and crafts • Community sanitation • Commercial food preparation • Agriculture

25. Innovative programmes Morocco Microfinance project • Partners are Shell, Afriquia Gaz, Total, Zakoura Foundation • Pilot phase US $150,000 rolled out successfully • Zakoura staff trained on LP Gas applications • Promotional material provided • Active promotion of applications around country • Quarterly status reports provided on status of loans • To qualify for loans, recipients must not have access to traditional sources of financing, must have a project generating income using LPG • Ultimate goal: create successful project template to be replicated in other markets

26. Innovative programmes contd/ Demand Side Management (DSM): Works! • Cost effective - low cost method of peak electricity load avoidance • The LP Gas element of the overall programme saved 48.3 MW of peak electricity usage out of a total target of 200 MW • 7000 electric appliances replaced by gas in middle and upper income households • 100,000 low income households switched to gas for cooking • Practical lessons learned • Industry has to guarantee: • Availability of supply • Stability of price DSM programmes can be replicated

27. Agenda • The World LP Gas Association at a glance2. Why LP Gas3. Innovations4. LP Gas as a Fuel for Rural Development5. Conclusions

28. What is the LP Gas Rural Energy Challenge? • A Public – Private Partnership (UNDP/WLPGA) • Address lack of access to clean energy through the use of LP Gas • Improve living standards • Contribute to achieving the Millennium Development Goals • Create viable and commercially sustainable LP Gas markets in rural / suburban areas of developing countries • for domestic consumption • for industrial productive uses

29. The rural distribution paradox • Low relative incomes in Rural Areas • Long distances / difficult terrain • Highest cost supply to those who can least afford it What are the barriers to rural distribution and how can they be addressed?

30. Barriers • Low density of LP Gas target population • Weakness of LP Gas distribution networks in remote rural areas • Low cash purchasing power • Need for local credit facilities • Inappropriate cylinder size • Lack of safety culture and poor enforcement of regulations • Widespread use of less healthy, or unsafe, fuels • Inadequate State policy to support fair LP Gas market development (some times keeping major players away), including: sub-optimal tax policies and emphasis on other fuels for various policy reasons 5

31. Developing Rural Markets WLPGA report based on in-depth survey of members and feedback from the WLPGA / UNDP Rural Energy Challenge The Report: • Summarises key barriers • Explores key success factors for developing rural markets • Showcases 10 case studies of innovative rural models

32. Agenda • The World LP Gas Association at a glance2. Why LP Gas 3. Innovations4. LP Gas as a Fuel for Rural Development5. Conclusions

33. Conclusions • LP Gas is an ideal fuel for development being available, acceptable and accessible • Strong endorsement of LP Gas has been received from key global authorities • Barriers to rural development exist but some can be addressed through private and public sector action • Good practices are the responsibility of both the industry and government • Good practices are essential for the safe and sustainable delivery of excellent services

34. And Finally… Mark it in your agenda now! Our 20th anniversary event & The LP Gas for African Development Conference 24th – 26th October 2007 Cape Town, South Africa www.wlpgasforum2007.com

35. Thank you