Project Cots and Process Of Investing in Small LPG Plant in Tanzania

Over the last ten years, there has been an increase in demand for liquefied petroleum gas(LPG) for households and commercial usage in Tanzania and Africa. The annual LP gas consumption in Tanzania has grown from 5,500 metric tonnes in 2005 to 145,800 metric tonnes in 2019.

Due to depleting natural reserves like woods and charcoals, continuous enforcement of regulatory norms, and increasing awareness towards eco-friendly products, LPG has evolved as the primary energy source in Tanzania and Africa.

Initially, the distribution of LPG was continued to urban areas only, but with rapid changes in the living condition of society, the requirement for LPG is increasing very steeply. Now rural population is also starting to consume LPG.

By 2028, other landlocked countries such as Rwanda, Eastern DRC, Zambia, Malawi, Burundi, and Uganda will have a good share of LPG sourcing from Tanzania. The demand is also likely to increase.

Read also: Feasibility reports for small LPG plant in Tanzania

What does it cost to set up a small LPG plant in Tanzania?

The cost structure for the small LPG cylinder filling plant consists of four main cost groups, which are; civil work costs, mechanical work costs, electrical work costs, and safety and security costs (mainly firefighting & lighting systems). The average cost for setting up a small LPG filling plant with an LPG storage tank capacity of 52 cubic meters (about 25MT) is estimated at USD 433,000

                                                

What are the Approval License and Permits Required for starting and Operating an LPG plant in Tanzania?

In terms of regulations, like any other part of the world, Tanzania’s energy business is highly regulated by several government agencies. Mainly Energy and Water Utilities Regulatory Authority (EWURA), Occupational Health and Safety Agency (OSHA), Weight and Measure Agency (WMA), Fire and Rescue Forces, Government Chemist Laboratory Authority (GCLA), Tanzania Bureau of Standards (TBS), Municipal Councils and National Environment Management Council (NEMC). You will need to permit from these institutions to start and operate an LPG plant in Tanzania successfully.

Risks and Challenges for Operating LPG filling Plant in Tanzania

Like any other sustainable business, there is a risk associated with running an LPG business in Tanzania

Financial risks. LPG is a commodity business, and usually, considerable financial risk is sales and purchase differences; maybe; maybe you buy LPG when the price is high, but you have to force to sell at less cost due to market conditions, So you must finish your stock quickly when you feel the market is going to be down 

Safety risks. LPG is flammable. You can lose a substantial amount of money plus a fine from the regulatory authority if an accident happens. The primary safety risk is a lack of qualified personnel to operate your plant. The simple truth is that there is a lack of qualified personnel to run LPG plants in Tanzania.

So typically, when hiring staff, they need more training or experience in running an LPG plant. So the most significant risk you face has an operator who needs to be more knowledgeable. The need to conduct initial and ongoing training must be balanced to ensure one has suitable operators. The highest risk and the most critical safety factor are adequate training and plant operations competence.