What will it take to transition more people across the world from solid biomass fuels to LPG?
It was such an honor to attend LPG Week in Dubai last week and participate on the LPG4DEV panel alongside distinguished panelists Mr. Morten Balle, Mr. Kushagra Mittal, Mr. Jakaria Jalal and moderated by Ms. Kristen Mueller. The progress made so far in transitioning people to LPG is one that should be appreciated, however, we still have 3 billion people who have no access to clean cooking energy and rely on solid biomass fuels such as charcoal, kerosene, and firewood to cook. In the LPG4DEV session, we discussed what we have learned so far in expanding access to clean cooking with LPG, the roadblocks that are preventing further transition and how can they be removed. A recap of our conversation is below - a warm thank you to the engaging audience for their questions and contributions and to Michael Kelly for the opportunity.
- Government policy and setting the right Tax and Regulatory frameworks is crucial for transitioning customers from biomass fuels to LPG.
- Affordability and the role that subsidies can play in catalyzing the transition - Case study of India presented by Mr. Kushagra Mittal on how the government subsidy program has increased LPG penetration and connections. While subsidies are not sustainable in the long run - they play a critical role in transitioning customers to LPG in terms of providing the attendant equipment and LPG cylinder with first fill.
- Case study of Bangladesh - shared by Mr. Jakaria Jalal - the government encouraged investment in the entire LPG value chain including duty waivers on the import of LPG and its machinery. Bangladesh is truly a success story in LPG uptake. A successful example - the country’s cylinder manufacturing capacity has grown to 200K cylinders a month allowing for cylinder deposits to come down significantly and be viewed as a medium to actually acquire new customers and volume by LPG marketers. As a result, Bangladeshi LPG consumption has grown 6x from 250,000mt in 2015 to 1.5million mt/year currently.
- Working on the supply side in terms of import and distribution infrastructure is just as important as building on the demand side. Developing countries need more private sector players to raise supply capacity and foster competition. Case study- Kenya has a single private sector player handling 90% of the country’s volume of LPG traded - expanding the supply providers would encourage healthy competition.
- Safety is key for widespread acceptance of LP - we cannot afford to have LPG associated with incidents and accidents and we need the right systems and regulatory frameworks to ensure safety of the product - contribution by Mr. Morten Balle.
In summary, the panelists agreed that multi-year multi-stakeholder (government and private sector) programs are key to drive further adoption of LPG that include:
- tax incentives that drive increased private sector investment in the entire LPG value chain at scale
- clear regulatory frameworks that encourage safety and order amongst LPG value chain participants
At PayGo we believe in leveraging technology to increase access to LPG through our two primary solutions:
- Our IoT device which allows customers to purchase LPG within their daily budget.
- Our tag and trace platform that allows LPG markets to track cylinder rotation throughout the supply chain as well as process mobile money payments and understand customer consumption patterns thereby allowing them to better plan for inventory and overall supply chain activities.
At PayGo, we believe that technology is an enabler for transitioning customers to clean cooking and has a critical role to play in adding efficiency to distribution and supply chain activities. Leveraging technology in the LPG value chain has the potential to bring down cost to serve by driving supply chain efficiency, productivity and cutting costs. We look forward to continuing to play our role in transitioning the next billion customers in our priority markets in Africa and Asia.
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