Oil & gas in Tanzania – activating LPG consumption

• Taifa Gas is responsible for overseeing 35 storage and plant facilities in Tanzania
• Taifa Gas has set foot in Kenya slated to construct an LPG plant in Mombasa
• LPG importation has increased by 14 per cent in Tanzania

Oil and gas in Tanzania is an essential lifeline of sustainable development.

Across most sectors, energy is not crucial, but a deal maker or breaker as the world economic powers rely on a sustainable and stable energy supply. In the same vein, Liquefied Petroleum Gas (LPG) in Tanzania just become a life-saver form of energy for cooking and heating.

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However, over the past decades, access to clean cooking energy was challenging as Liquefied Petroleum Gas (LPG) LPG penetration was significantly low. Currently, most people across Tanzania are aware and adopt the appropriate use of LPG for daily cooking and move far from traditional fuels, firewood and charcoal.

In August, this East African nation is hosting the 4th Tanzania Energy Congress (TEC) in Dar Es Salaam on August 3 – 4, 2022.

The two-day summit comes against the backdrop of the just signed liquefied natural gas (LNG) deal between the Tanzanian government and several international energy companies.

For well-established companies in the LPG distribution in Tanzania, Taifa Gas, Oryx Energies, Manjis Gas supply and Lake Gas limited, there’s nothing that can stop them from expanding their reach and transforming the LPG consumption landscape in the nation.

According to 2020 data from Energy and Water Utilities Regulatory Authority (EWURA), the LPG market of Tanzania is shared by four companies on a larger scale, Oryx Gas, 46.6 per cent, followed by Taifa Gas, 22.2 per cent, Manjis Gas and Lake Gas 9 per cent and 7 per cent respectively.

Over the past two years, LPG prices have fluctuated, argued for high world market prices and compounded by high transportation costs, particularly for the Oryx Gas brand.

LPG in Tanzania

Tanzania has come a long way for the industry to stand on stable ground. By 2005 annual consumption of LPG in Tanzania was at 5,500Metric Tonnes (MT). In 2019, the number rose to 145,800 MT (Tanzania Petroleum). Quite recently, at least 217,149 metric tonnes of LPG were imported into the country by the year ending June 30, 2021, compared to 189,509 metric tonnes imported the previous year.

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Investment in the sector has become notable as various investors jump into the industry from both ends, manufacturers and sellers. In 2019, Tanzania’s business mogul Rostam Aziz, one of the nation’s most successful businessmen, built a $65 million LPG storage and filling facility in the nation’s commercial pulse, Dar es Salaam.

Through a Tanzanian company, Taifa Gas Limited constructed the facility, LPG penetration in Tanzania is expected to rise.

At the centre of improving clean, affordable and reliable energy consumption, the Tanzanian government is opening its arms to embrace the private sector’s support to the industry.

On a broader scale, gas is relatively cheaper than charcoal. Government reports note that an average cost of a family on energy stands at $51 per month, preferably going to charcoal as an option. Meanwhile, the same family could revert the prices and invest in a 15 kg cylinder of gas sold at $20 (The Citizen).

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The LPG industry in Tanzania stands to change for the better as consumption increases. At the helm of introducing new investments in the oil and gas sector, Tanzania’s LPG industry is slated for the best.

On a comparison basis, the Tanzania LPG industry is doing relatively well compared to the past years. Via Taifa Gas Limited, 35 plans and storage facilities have been established since 2016.

In 2019 the government of Tanzania argued that at least eight companies dealing in LPG assisted Tanzania in increasing gas consumption across the country.

The numbers grew from 17,000 in 2010 to 92,500 tonnes in 2018 (The Citizen).

Meanwhile, point out on Taifa Gas’s contribution capacity storage capacity was from 8,050 in 2016 to 15,600 tonnes.

Further down the line, the importation of LPG has been progressively changing over the past three years–as well as oil and gas in Tanzania.

“Tanzanians increasingly shifting to cleaner domestic energy options. Imports by LPG marketing companies (LMCs) grew by 12.9 per cent, up from 107,083 tonnes in 2016/17 to 120,961 tonnes in the 2017/18 financial year. Imports also grew by 20 per cent in the following year, reaching 145,800 tonnes, then recorded a massive 30 per cent growth, reaching 190,248 tonnes in the 2019/20 financial year,” according to data from EWURA.

Tanzanians mostly enjoy consuming a wide array of LPG cylinders from 3 kg to 38kgs used by large consumers—hotels and high-end restaurants.

The current landscape of LPG

The LPG market in Tanzania is growing, and investors are eyeing to expand even more. However, the market across the region isn’t accessible as Kenya, Tanzania’s trade partner is set to establish the most extensive LPG facility.

On that note, the government of Tanzania views Kenya’s ambitious LPG project as not affecting the nation’s industry.

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According to EWURA’s director general, Modestus Lumato, at least 30 to 40 percent of LPG imported into Tanzania is exported to neighbouring nations, mainly Kenya, Rwanda, Burundi and Malawi (The Citizen).

On the other side of the aisle, players in the LPG field are arguing for intensification of the promotion of LPG use, increasing Dar es Salaam Port’s handling capacity from the current number of 5,000 tonnes, improving storage capacity and further speeding up clearance at the port.

As LPG importation increased by 14 per cent, experienced stakeholders in the sector, such as Oryx Energies, argue for the deliberate increase of households consuming LPG over time and space.

LPG companies in Tanzania such as Taifa Gas strive to activate healthy and sustainable clean energy consumption over time and space as well as oil and gas in Tanzania. Thanks to charcoal campaigns waged by the government and private sectors., LPG adoption is becoming the new norm.

On that note, Tanzania has an interesting energy growth story and there’s an opportunity for stakeholders to be part of the historic moment.

The Tanzania Energy Congress (TEC), which is held under the patronage of His Excellency January Makamba, Minister for Energy of the United Republic of Tanzania, will highlight the plans and priorities of the Ministry of Energy with regards to the next strategic steps in both the energy and hydrocarbons sector in Tanzania. TEC will kickstart from 3 to 4 August in Tanzania’s commercial capital, Dar es Salaam.