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LPG ChallengeDonor profileOrigin of fundsUNDP? Sustainable Energy Global Programme and private sectorGoals/aimsAddress concrete barriers to meeting the thermal energy needs (heating, cooking, and heat using productive processes) of rural and peri-urban populations in developing countries through expanded use of a clean-burning, readily-available fuel: liquefied petroleum gas (LPG).Main form of supportCapital investmentTypical budget sizeSupport typeTechnical assistance, Social development, Demonstration projects,Countries of operationdeveloping countriesMain target groupsIndustryGeneral conditionsMain objectives of the Initiative: This initiative is designed to support the achievement of critical energy-related sustainable development goals, specifically poverty reduction, environmental protection, and economic growth. This partnership addresses concrete barriers to meeting the thermal energy needs (heating, cooking, and heat using productive processes) of rural and peri-urban populations in developing countries through expanded use of a clean-burning, readily-available fuel: liquefied petroleum gas (LPG). Over 2 billion people in developing countries depend on traditional fuels including wood, animal and crop residues, and charcoal, to meet their heating, cooking and industrial needs. This has adverse health effects on women and children, degrades the local natural resources base and contributes to global environmental degradation through the emission of unburned hydrocarbons. Social and economic limitations for women, low quality energy services in heat using industries due to fuel inefficiency, and lost opportunities for agricultural product processing, are all directly related to traditional fuel use patterns.The LPG Challenge will bring LPG to rural populations by linking UNDP's knowledge and experience in rural development and community consultation together with industry suppliers of LPG and the appliances required for its utilization. The key issue is to address market and technical barriers to the expanded use of LPG and to design local partnerships, business models and financing mechanisms to overcome these barriers. This will be accomplished through local dialogue processes and partnerships involving government officials, consumer representatives, current LGP market participants (local and international business), local entities that operate in rural communities, UNDP and other multilateral and bilateral funding agencies committed to bringing modern energy (electricity and clean fuels) to rural communities. Partners: UNDP, World LP Gas Association (New York), local and international LPG suppliers/distributors as well as national NGOs and CSOs. Summary: Address concrete market and technical barriers to meet the thermal energy needs (heating, cooking, and heat-using productive processes) of rural and peri-urban populations in developing countries through expanded use of a clean-burning, readily-available fuel: liquefied petroleum gas (LPG). Expected results: 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. 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. 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. Funding arrangements: No specific numbers indicated. UNDP and WLPGA members will raise resources for the initiative jointly. 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. 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. Capacity building and tecnology transfer: UNDP efforts will focus primarily on the policy and capacity development requirements while business partners engagement will focus on the financing and technical barriers to be overcome. Example projectsContact detailsWebpage:Contact: Ms Susan McDade Email: susan.mcdade@... SourcesThis profile, based on initial information contributed by Eco Ltd, was updated within the framework of the Sparknet project supported by the European Commission's Fifth Framework Programme.Click here for the full list of donor, organisation, and project profiles from Sparknet. | |
 Page created:
12 March 2004; Last edited:
12 March 2004; Version: 0 | |
Pagename: LPGChallenge @HEDON: PWAA | |
