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LPG Challenge, The
[last updated February 17, 2006 1:30 PM]
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Partnership website(s) |
Expected TimeframeOctober 2002 - October 2007 |
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Primary Themes:
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Secondary Themes:
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Geographic Coverage
Geographic Scope: Global
Country(ies) where the partnership is being implemented: France |
National Focal Points
This partnership has not made any contact with the national focal points for sustainable development in the countries involved
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Partnership targetsSeveral pilot projects will be initiated in different regions, beginning in late 2002. Specific targets remain to be finalized but will have two basic categories: affordability of LPG and availability of LPG. UNDP hopes to undertake this partnership in not less than 10 countries and each partnership will depend on the commitment of government and business to expand LPG use in the country in question.
Expected results include: New business models, financing mechanisms and supportive policy frameworks to address fuel and equipment pricing are needed to expand the use of LPG. This will require collaboration between government officials, business, consumer groups and the development assistance community. At the national level, this initiative will begin with an in-country consultation with stakeholders to determine the specific barriers to be addressed and to define the specific outcomes to be achieved. Outcomes will include increased numbers of households using LPG as well as increased total volume and sales of LPG in the target area. The barriers and outcomes will be specific to each country or area but will have in common a focus on the affordability and availability of LPG and will involve multi-stakeholder collaboration and partnerships. Another possible supply-side effort is the expansion of storage capability for imported LPG in order to capture the economies of scale in shipping to lower the price to rural users. Projects may also address recurring user costs through investment in the production of smaller LPG cylinders. In addition, rural delivery systems may be expanded by building on existing non-LPG industry distribution networks. In this regard, the role of agricultural cooperatives, civil society organizations working in rural areas and non-energy sector businesses with mature distribution systems in rural areas will be important elements of partnerships. |
Progress against targetsA brief update for each country is presented below:
a. South Africa: · The LPG industry has invested $4 million for 60,000 households (hh) to use LPG. The medium-term objective is to scale up to 250,000 hh with overall target of 3 million hh in the long-term switching to LPG. b. Morocco: · Microfinance pilot project in Morocco has been in the design stages recently with the National Government ready to invest $100,000 for a pilot project starting in January 2006 to use micro credit to provide financing access to LPG. c. Honduras: · There is a lack of convergence on common objectives from both the public and private sector perspectives on the partnership. d. Ghana · Ghana is quite active in LPG market development. Local LPG industry is promoting LPG use but they are not part of the WLPGA. UNDP Energy Thematic Trust Fund (TTF) resources are working quite well, with various training activities in public schools and restaurants, conversion of an estimated 2000 households to LPG, and safety standards being drafted for consideration by the National Standards Board. In addition, a $125K grant from PPPUE provides expansion opportunities for LPG in Ghana. · Both UNDP and WLPGA are interested in business models that can be replicated elsewhere. Ghana is a strategic country in relation to scaling up as it is part of the Millennium Project; thus the experiences of the LPG work through both the partnership and UNDP?s in-house efforts could be potentially useful for replication in Africa to meet the MDGs, as part of the Millennium Project. e. Vietnam: · Vietnam appears to be on the fence with not much progress made since the holding of the workshop in October 2004. The NPG has not met since then and no concrete activities have taken place under the partnership. f. China: · There appears to be tremendous potential for progress but much remains to be done. Both a national workshop and closed side-event at the margins of the WLPGA Forum were held in recent months but with little concrete resulting momentum. · China has strong domestic presence of bottlers, distributors, etc. and also strong nationalist tendencies on domestically ensuring energy supply within the country. |
Coordination Mechanism of the PartnershipThe initiative will be coordinated at the global level by UNDP's New York based Sustainable Energy Programme drawing on the in-country presence of the UNDP Country Offices. Under the leadership of the Resident Representative, the UNDP country offices will work with local officials to ensure in-country coordination. Energy and environment is one of UNDP's six corporate priorities worldwide and UNDP is currently working on energy issues in the majority of all country operations.
The main industry partner at the global level is the World LP Gas Association that will facilitate the involvement of its member companies. Membership includes both major multinational energy companies as well as independent LPG marketers (domestic and international). Member companies will become involved based on their interest and commitment to the specific country where the activities will be implemented. UNDP and the WLPGA will look for partners from both the bilateral donor community as well as other multilateral organizations to participate in country level partnerships. Using the already established Result Oriented Annual Reporting (ROAR) mechanism used to monitor all UNDP country level operations, output, outcome and overall progress indicators will be available to track progress on this initiative in the countries of operation on a yearly basis. Due to the innovation aspect of the partnership and the need to capture and learn from experiences, UNDP will also collect project progress information at the national level drawing on out posted policy and technical specialists as well as the New York based Sustainable Energy Programme Team. Depending on the country of operations, this initiative could be closely linked to the Global Village Energy Partnership (GVEP) facilitated by ESMAP (Energy Sector Management Assistance Programme) in which UNDP is also a partner. |
Implementation Mechanism of the PartnershipThe LPG Challenge will compliment such international-level energy for sustainable development efforts as the Global Village Energy Partnership (GVEP) by providing modern energy services to rural areas, specifically targeted at meeting thermal energy needs. In addition, in the event that countries in which the LPG Challenge is undertaken are the same as those in which the World Bank's Global Gas Flaring Reduction Initiative is implemented, it will support the latter by using gas that would otherwise be wasted through flaring for productive purposes.
This initiative will bring liquefied petroleum gas to rural populations using public-private partnerships to address two issues: affordability and availability. Where affordability is concerned, partnerships may propose special subsidy and financing arrangements by host governments to address the critical first cost barrier to consumers presented by the necessity to purchase an LPG cylinder and appliances. Projects to finance cylinder and appliance purchase through establishment of ESCOs, micro credit, or other mechanisms may also be supported. While the price of the LPG fuel itself may be affordable once cylinder and appliance costs are dealt with as described, distorting subsidies on competing fuels such as kerosene will have to be explicitly addressed in many cases. This partnership does not depend on the subsidization of the fuel itself. The ability to pay, or the existing practice of paying, for traditional fuels will be a key determinant in selecting areas for operational activities under this initiative. In terms of availability, partnerships may propose projects to increase local LPG availability addressing distribution issues such as LPG marketer ownership of a small storage and bottling facilities nearer to the target market. Such projects might involve a number of different LPG marketers and in some cases will enhance domestic and international business collaboration. |
Funding Currently AvailableAmount in US$:
Source(s): Private sector - IGO
UNDP's initial commitment to this effort will be funded through core resources available under the Sustainable Energy Global Programme due to the innovation aspect of this public private partnership model. WLPGA will commit funding and technical expertise for the country identification and dialogue phase and will invite member companies to contribute funds and technical expertise on a country-by-country basis. |
Non-financial resources availableType(s):
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Funding SoughtRequired Amount in US$: not specified
Source(s) already approached: UNDP and WLPGA members will raise resources for the initiative jointly. UNDP is also seeking to raise non-core contributions from bilateral donors to support this initiative using the new Thematic Trust Fund on Energy for Sustainable Development as the funding window to accept and disburse LPG Challenge project funding. Details of this arrangement remain to be finalized.
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Non-financial resources soughtRequirement(s):
Source(s) approached and details:
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