The National Oil Company (NOIC) has embarked on the construction of a 2 000 tonne liquefied petroleum gas (LPG) handling depot in Ruwa at an estimated cost of $29,6 million.
The development comes at a time when the use of gas, particularly by households, is rising in the country, thereby demonstrating its acceptance by consumers.
LPG use has come to the fore riding on the development of new settlements across the country. Some of the areas are not yet electrified. Other power users are opting for the energy source to cut grid electricity costs.
Outgoing Permanent Secretary in the Ministry of Energy and Power Development, Mr Partson Mbiriri, told The Sunday Mail Business after a recent NOIC 4th annual general meeting that the LPG depot will be constructed in phases.
The first phase, which seeks to establish 500 tonnes of storage, is earmarked for completion by end of next year and will gobble $7,8 million.
Said Mr Mbiriri: “We have embarked on the construction of a 2 000 tonne Liquefied Petroleum Gas handling facility in Ruwa.
“The first phase to establish 500 tonnes of storage is expected to be completed by 31 December 2019. The cost of the first phase stands at $7,8 million.”
The overall cost for the depot has been tentatively set at $29,6 million but the cost can either go up or down depending on the cost of materials.
Further, the overall cost of the depot could also be influenced by technological developments.
Mr Mbiriri confirmed that currently, the total cost would be difficult to determine.
“It is certain at this point in time that the cost is an estimate. The bulk of the equipment is imported. The pipes will be imported depending on the cost and the extent at which exchange rates will be applicable.
“So one can do a simple computation based on $7,8 million for 500 tonnes. It is compounded by the fact that as technology improves, costs invariably come down,” he said.
NOIC, which is mandated to ensure the security of fuel supply in the country through the provision of bulk fuel transportation, storage, re-delivery service and also trades in petroleum products and ethanol; has been investing heavily in infrastructure development.
Last year, the company continued with the implementation of other projects such as the construction of two ethanol storage tanks at the Mabvuku Depot.
The tank has a capacity of six million litres and the project is scheduled to be completed by December 31 this year.
The cost of the project stands at $6 million.
NOIC is also developing storage and handling facilities for Jet A1 fuel at the Robert Gabriel Mugabe International Airport at a cost of $9,3 million.
All the projects are being financed from the company’s own resources and the progress of implementation is largely determined by the availability of foreign currency to import required materials.
LPG imports surge
The Zimbabwe Energy Regulatory Authority (Zera) says imports of gas jumped 18 percent to 20,06kg in the first six months of the year, compared to the same period last year.
Outgoing Zera chief executive officer, Engineer Gloria Magombo, said gas penetration in the domestic sector has spurred the jump.
“LPG imports have also been going up over the same period (first six months), indicating increased penetration mostly into the domestic sector,” said Eng Magombo in emailed responses.
“A comparison of January to June 2017 against the same period in 2018 shows that imports have increased by 18 percent from a figure of 17 kg in 2017,” she said.
Last year, the importation of LPG also rose 67 percent between January and June, indicating that the use of the alternative form of energy was gaining traction in the country.
LPG imports stood at 1,5 million kgs in January but ballooned to 2,5 million kgs in June last year.
The rise in gas imports is also attributed to the awareness campaigns that Zera embarked on its safe use.
Experts say LPG is a safe alternative source of energy for lighting, cooking and heating.
Initially, there was general apathy over adopting gas as a form of energy, largely because of alleged safety concerns.
However, since 2014 when LPG started to gain traction in the country, only one death and eight injuries were recorded by mid last year.
Zera investigations revealed that such accidents occurred when consumers bought LPG from unlicensed and illegal retailers.
Updated figures on injuries and deaths as a result of LPG could not be obtained by the time of going to print.
Many people are now turning to LPG for cooking and heating due to its lower costs averaging $2 per kg, with estimates showing that a family of four requires about 7kgs per month.
Grid electricity costs about $30 per month for a family of about five people.
Zera says the cost of saving power when consumers switch to LPG for cooking and heating, among other energy efficiency measures, is much cheaper.
When citizens use about 2 500 tonnes of gas per month for cooking and heating, it is estimated that 104,4 megawatts (MW) of grid electricity would have been saved.
With more citizens embracing gas as a form of energy, the country had 16 wholesale or import licences, and 126 retail licences as at December 31, 2016.
From January to the end of February 2017, Zera had licensed 44 retailers and eight more wholesalers or importers.