OTHER LPG INITIATIVES

1. EXECUTIVE SUMMARY
Liquefied Petroleum Gas and natural gas are the least Carbon-intensive fuels
among the Hydrocarbon Fuels currently in use. The two will therefore play a
major role in the long-term transition to a sustainable global energy system.
This executive summary provides an overview of the Liquefied Petroleum Gas
(LPG) growth strategy in Kenya. The strategy aims at increasing LPG
consumption in the country through three key initiatives: the Clean Cooking
Gas (CCG) project, the subsidized LPG cylinders project, and the key LPG
Infrastructure Development Project. Additionally, the report highlights the need
for effective monitoring of the LPG sector through the regulation of LPG
operations in the country.

LPG importation and distribution is currently being undertaken by the private

sector majorly because of a lack of investment in LPG infrastructure by the
Government.

The Clean Cooking Gas (CCG) project focuses on promoting the use of LPG as a
clean cooking solution in correctional institutions, production in factories and
in hospitals for uses such as providing hot water at the taps or showers,
equipment sterilization, humidification and heating. The objective is to reduce
indoor pollution, greenhouse gas emission, negative health impacts, and
deforestation associated with biomass usage. The project targets five thousand
(5,000) public boarding schools and learning institutions between 2023 and
2027 starting with six hundred (600) institutions in the Financial Year
2023/24. The Government will provide initial investment and infrastructural
support, which will be funded through the kerosene anti-adulteration levy. The
Government will also work with the private sector through Public Private
Partnerships to actualize the targeted transition.
The Subsidized LPG Cylinder (SLPGC) project aims at transitioning households
from traditional fuels to clean cooking with LPG. It addresses barriers to LPG
use, such as high upfront costs and inadequate distribution infrastructure.
The project will be implemented through two models: the conventional
Cylinder, grill & burner model, and the Cylinder Smart Meter (CSM) model. The
CSM model leverages on Internet of Things (IoT) to mimic users' behavior and
enable small-scale LPG purchases based on disposable income. A similar
project was piloted in Machakos and Kajiado Counties in Financial Year
2017/18 and plans are at an advanced stage to distribute sixty thousand
(60,000) subsidized LPG cylinders to households in Nairobi City County. The
CSM will be implemented once all the necessary infrastructure is in place.

The key infrastructural development project aims at ensuring that importation

and distribution of LPG is efficient and cost effective. The initial phase of the
project will involve construction of a thirty thousand (30,000) metric tons (MT)
bulk import, storage, and handling facility in Mombasa by Kenya Pipeline
Company Limited (KPC) that will in the medium term facilitate importation of
LPG through an Open Tendering System (OTS). Additionally, KPC will
construct a ten thousand (10,000) MT inland LPG storage and handling facility
at Athi River to facilitate distribution to the hinterland and export to the region.

The implementation of these initiatives will contribute to socio-economic

development, job creation, inclusive growth, environmental conservation and
are in line with the Bottom-up Economic Transformation Agenda (BETA) as
enshrined in the Kenya Kwanza (KK) Government manifesto.

The strategy further aims at supporting the Government’s agenda on affordable

housing, by ensuring reticulation of LPG in all social housing units.

The projects may face various challenges, including funding limitations, delays
in procurement, inadequate distribution infrastructure, high LPG costs, and
fluctuating international prices. The proposed mitigation measures to the
challenges include securing budget allocations, seeking funding through grants
and donations, ensuring transparency in the procurement processes,
encouraging private investment in LPG distribution infrastructure, and
exploring options like zero-rating LPG and utilizing hedging instruments.

The LPG growth strategy in Kenya aims to support Sustainable Development

Goals (SDGs) through enhancing accessibility and affordability to LPG, which
is a cleaner fuel compared to biomass and kerosene.

JUSTIFICATION

The use of biomass fuel such as firewood comes with negative impacts because it is a
driver for deforestation which has resulted in persistent droughts, loss of crops and
animals, and contributor to global warming. The use of firewood for cooking also has
significant negative effects on health due to exposure to smoke in indoor settings. On
the other hand, the use of Heavy Fuel Oil which has more complex content of higher
nitrogen, sulfur, and carbon ratio, when combusted, releases higher levels of harmful
emissions such as NO2, SOx and ash particles, hence contributing to global warming.

Maintenance cost of the installations is also high due to the use of these dirty fuels.
Personnel involved in the maintenance of engines and other related parts may also
suffer negative health impacts due to exposure to Heavy Fuel Oil and their by-
products such as soot produced in the process.

Reduced reliance on biomass fuel and Heavy Fuel Oil could contribute to reducing
greenhouse gas emissions.

It is for these reasons that there is need to shift to usage of less carbon-intensive fuel
such as Liquefied Petroleum Gas (LPG) if Kenya is achieve a long-term sustainable
global energy system.

OBJECTIVES

The objective of the project is to:

i. Encourage transition to gas –fired boilers in hospitals, factories and

industrial power Plants to reduce carbon emissions.
ii. Encourage all correctional facilities across the country to adopt CCG as a
clean cooking solution to reduce indoor air pollution as a result of using
biomass fuel.
iii. Improve the availability, affordability and sustainability of CCG by
addressing infrastructural and supply chain constraints.
BACKGROUND

Firewood and Heavy Fuel Oil (HFO) are the primary sources of fuels used in powering
steam boilers in hospitals and factories due to their affordability and availability.
Firewood is also the main source of fuel used in correctional facilities in Kenya mainly
for cooking.

In hospitals, steam produced by boilers may be used in such processes like equipment
sterilization, heating up rooms, humidification, providing hot water from taps and
showers. On the other hand factories such as those in manufacturing like textile,
agricultural, pharmaceutical, breweries and distilleries also use steam boilers for their
various processes. Thermal Industrial Power Plants mainly use Heavy Fuel Oil to run
the engines for power generation. The continued use of such fuel comes with negative
impacts as firewood is a driver for deforestation which has resulted in persistent
droughts, loss of crops and animals, and contributor to global warming. The use of
firewood for cooking also has significant negative effects on health due to exposure to
smoke in indoor settings. Reduced reliance on biomass fuel and Heavy Fuel Oil could
contribute to a reduction of greenhouse gas emissions. HFO has more complex
content with higher nitrogen, sulfur, and carbon ratio. Thus, combustion of HFO
releases higher levels of harmful emissions, NO2, SOx and ash particles into the
atmosphere.

Additionally, maintenance cost of the installations in such set ups is also high due to
the use of these dirty fuels. Personnel involved in the maintenance of engines and
other related parts may also suffer negative health impacts due to exposure to Heavy
Fuel Oil and their by-products such as soot produced in the process.

CURRENT STATUS

Currently, the type of fuel commnthere is no available data in the public domain
which shows the type of fuel used in hospitals, factories and correctional institutions.
As such, it would be prudent to
RISK EVENT IMPACT OF THE MITIGATION MEASURES RESPONSIBLE
AND RISK TO THE PERSON

Risk Rating (P*I)

Colour Coding
Impact, I (1-5)
DESCRIPTION PROJECT

PROBABILITY
P (1-5)
Illegal refilling Loss of revenue 5 5 25  Strong enforcement State
of LPG cylinders by the against illegal refilling Department
for MSMEs government  Strengthen for Petroleum
distribution network EPRA
to support
subsequent refills and
availability. This will
entail the
construction of LPG
mini-filling plants,
distribution, and
collection points.
 Provide unique
branding for the
cylinders.

Ensuring the Disruption in 4 5 20  Have distribution State

Security of supply and centres in all major Department
Supply of LPG access to LPG towns in Kenya for Petroleum
for hospitals,  Have stockists or
correctional appointed retailers in
institutions, all small centres
NYS, Military around the country
facilities,  Install cylinder
MSMEs tracking system:
-to obtain near real
time information on
inventory levels,
-to replenish stocks
and avoid over
stocking,
-to identify points of
diversion of stock
Delays in the Delays 5 5 25  Fast track the National
procurement encountered in procurement process Treasury, SDP,
process purchasing of  Have clear timelines
--Services cylinders and for each activity
rendered by services offered
different will affect the
agencies, project
departments or implementation
ministries
involved
Environment Setting up the 5 5 25  Ensure ESIA is done National
and regulatory infrastructure to identify Treasury
compliance may bring with environmental and SDP
it some social issues relating NEMA
environmental to the project to
concerns with instigate corrective
adverse measures.
negative  Continuous
impacts on the monitoring as the
ecosystem project carries on
Misinformation Some of the 2 5 10  Stakeholders SDP
stakeholders sensitization
may be given  Communication
wrong strategy
information
regarding the
project thus
derailing its
successful
implementation
Conflict of This may come 3 5 15  Strict adherence to National
interest about in the the law in matters Treasury
awarding of relating to SDP & other
tenders for procurement concerned
infrastructure  Encourage stakeholders
development transparency in the
whole process
Safety and The LPG 2 5 10  Enforcement of State
Regulatory cylinders are Safety protocols Department
compliance filled with a  Schedule frequent for Petroleum
highly checks of the and other
flammable and cylinders and safety agencies
pressurised gas. valves
Any leaks of the  Offer fire fighting
gas could cause
 a serious training to those
explosion involved in the
accident which transportation and
could be fatal refilling of the LPG
cylinders, Tankers
 Install the required
fire fighting
equipment where
necessary
 Carry out safety
awareness campaigns
 Provide designated
emergency response
teams

High Cost of The high cost 3 4 12  The government State

LPG: will discourage should consider Department
 Due to uptake since subsiding the cost of for Petroleum,
government many LPG. National
taxes on households will  The government to Treasury
LPG not meet the take on the initial
products cost costs of purchasing
cylinders and stoves
Lack of goodwill If the project 2 4 8  Identify the relevant State
from the does not garner stakeholders/ end Department
stakeholders support from users and have them for Petroleum
and the target the end users, it involved from the
market will be difficult inception of the
to implement project to its
implementation
Interference Will affect 2 4 8  Need for close State
from penetration of monitoring of the Department
competitors LPG to the market trends to gain for Petroleum
target market a competitive edge
 Establish and
maintain a strong
distribution network
 Build better customer
relations and focus