The Case for a Switch to LPG. Liquefied Petroleum Gas. Presentation to Business Innovation Facility. By. Oando Marketing Plc NOVEMBER, 2011

Transcription

1 The Case for a Switch to LPG Liquefied Petroleum Gas Presentation to Business Innovation Facility By. Oando Marketing Plc NOVEMBER, 2011

2 Content Executive Summary the LPG story Energy Consumption Patterns LPG Utilization Roadmap Why LPG? Oando Marketing s Initiative Winning Strategy Distribution Network Impact of Initiative Oando Marketing PLC The Right to Win

3 LPG Consumption (Kg/Household)* Executive Summary... the LPG Story th $I3.2b* $II.06b* Largest Producer of LPG in the World 2 nd Producer of LPG in Africa 150 million TOTAL POPULATION 25 million Households Av. 6* person per household Research shows that more customers are willing and ready to switch to LPG* Willingness to Change Cooking Fuel $23.3b* $26.2b* $377.9b** No change 27% Kerosene 12% - Senegal Gabon Angola Cote d'ivoire Ghana Cameroon Rep. Congo Nigeria Change 73% Gas, 54% Others, 7% LPG Market Potential 1,500,000MT Current Market Size 115,000MT... here lies a big opportunity Source: NNPC Annual Statistical Bulletin 2009 The Right to Win **CIA FactBook 2010 (Estimates) * COUNTRY GDP 2009 * *COUNTRY GDP 2010

4 Energy Consumption Patterns Household Income > 1500USD/ Year 2.5% Presently, the top tier of the pyramid use Kerosene, LPG & Electricity for their cooking and heating needs. The Bottom of the Pyramid, which makes up the lower / rural class segment, rely on firewood and coal for their cooking and heating needs. > 500USD/ Year 38.5% Why the Gap? Cost of the initial investment in cylinders Cheap cost of alternatives < 500USD/ Year 59.0% of the population Awareness Immense opportunities exist in the mid/ bottom tier of the pyramid! Traditional consumption patterns * Source: World Resource Institute, The next 4 billon The Right to Win

5 LPG Utilization Roadmap Must be Premised on Efficiency & Social Benefits The hazardous effects of using unsustainable and unsafe cooking fuels 100,000 ANNUAL DEATHS FROM INDOOR POLLUTION 8.5% ESTIMATED LOSS OF DISABILITY ADJUSTED LIFE YEARS 55.7% PERCENTAGE OF PRIMARY FOREST LOST The Right to Win

6 Why LPG? KEROSENE FIRE WOOD LIQUIFIED PETROLEUM GAS 50% Heating Efficiency Unit Cost N3, Liters 35% Heating Efficiency Unit Cost N3, Kg 85% Heating Efficiency Unit Cost N2, Save 100,000 lives yearly Create 42,000 direct and indirect jobs 12.5 Kg Reduce global emissions Reduce deforestation Generate revenue for Government Reduces Indoor Air Pollution The Right to Win

7 Oando Marketing s Initiative Oando Marketing PLC has developed a new market stream by targeting a segment that has not previously been targeted directly, despite their huge numbers: Patented & specially designed 3kg LPG cooking stove Re-worked Distribution Approach 5 million households SWITCHED This channel will consist of a vast network of dedicated wholesalers (O-Gas Distributors) servicing a dedicated network of retailers. The Right to Win

8 . A Winning Strategy Distributor - A smaller LPG cylinder size that is Portable Easily stored Can be refilled affordably - Vast distribution network where cylinders can be gotten and refilled 10 minutes from the end user s home - Awareness campaign that highlights the advantages of LPG and how to use it safely - Access to financing options to make initial purchase of cylinder more affordable for the end user The Right to Win

9 Distribution network At the center of the dedicated distribution channel is the O- Gas distributor. The O-Gas distributor manages the O-Gas wholesale hub and the network of MFs attached to each distributor End User Micro-Franchisee Each distributor is expected to drive the distribution and sales to the micro-franchisee and also invest in logistics support O-Gas Distributor Start OMP LPG Terminal Oando is responsible for logistics of cylinders between terminal and distributor as well as sales and marketing support for the distributors The Right to Win

10 No of Micro-franchisees No of Secondary Distribution Points Impact of Initiative Cylinder Injection 1,415,666 1,542,379 1,388,377 1,035, ,570 Year 1 Year 2 Year 3 Year 4 Year 5 Over the next 5 years, OMP seeks to reach 5mn households (representing 19.2% of total), thereby generating 612,617 Metric Tonnes (MT) of LPG sales No of SDPs & MFs Now Year 1 Year 2 Year 3 Year 4 Year 5 MFs 0 1,566 11,784 32,215 32,215 32,215 SDPs ,351 1,351 1, The Right to Win

11 Oando Marketing PLC The Right to Win

12 Oando Marketing PLC: An overview 8 Terminals 159.5m Litres capacity 3 Aviation Depots 3,000MT Combined Capacity Access to 13 government depots across the country (shared with other Majors) 2 Lubes Blending Plants 100m Litres capacity 7 LPG Filling Plants MT combined capacity Over 1,980 trucks through partnerships with several transporters Over 500 Retail Outlets across Nigeria Over 500 Industrial Customers (i.e. Direct Sales, Vendor- Managed Inventory, Value Added Peddling The Right to Win

13 Oando s Gas Supply Channels Sokoto Kaduna Jos Sourcing International market NLNG off-takers Government owned refinery OMP s LPG bulk filling plant Benin Logistic support Lagos Warri Enugu By depending on multiple sources for the supply of the product, Oando enjoys a reliable supply of LPG at all times The Right to Win

14 Thank You The Right to Win