Corridor to cheaper energy

By Musa Carter
September 2012
Prime Business
The managing director of Auto-Gas Namibia, Antonio Mendonca gives a short preamble to describe Auto-Gas Namibia; ‘Auto-Gas goes beyond gas as we offer more than just gas’.

Founded in 2002 by Mendonca, Auto-Gas seeks to address the energy problem that we face these days and years to come.

One of its strategic developments is to play a vital role in the distribution of Liquefied Petroleum Gas (LPG) to some of the Sadc countries (Namibia, Zimbabwe, Botswana and even as far as DRC).

This ambitious project will come to fruition through the proposed oil terminal construction under the Corridor Gas & Oil Terminal (Pty); a joint venture between Namibian and Botswana-based companies (Auto-Gas Namibia and Pula Energy). At 43, having stayed in Australia for 25 years, Mendonca holds a double degree in International Trade and Commercial Law and a masters degree in Finance that he obtained while in Australia.

He worked in the Common Wealth Bank of Australia before deciding to return to Africa where he realised the fuel problem in Namibia.

Since Namibia has been a net importer of many commodities including gas, Mendonca saw an untapped niche market in the gas conversion industry and pursued it.

“I got two vehicles from the Ministry of Works and Transport to start my conversion of fuel to gas and at the time, gas prices were quite cheap,” Mendonca states. Now he boasts of 1000 gas-powered vehicles used by the Ministry of Finance and the private sector from a mere start-up capacity of two gas-powered vehicles.

The lack of infrastructure and of filling points were a barrier upon entry into the conversion business and the only way to penetrate was through investments, which Auto-Gas Namibia achieved through a partnership with South Africa’s Easy Gas that promised to build the filling points.

However, the small Namibian market failed to produce enough volumes thus forcing the company to venture into alternative use of gas.

This conversion business was boosted more when a Government tender for the supply of gas was awarded to Auto-Gas. The supply of LPG to the Ministry of Defense and hospitals was mainly for their stoves and other gas-powered utilities.

From then, Auto-Gas spread its wings as now it has depots in Okahandja, Swakopmund, Mariental, Keetmanshoop, Oshikango and Rosh Pinah. The company has further created networks mainly for domestic gas use.

“Auto-Gas is doing quite well in terms of domestic gas distribution and conversion but there is need for an alternative source and construct a terminal other than South Africa since prices of gases keep escalating,” states Mendonca.

With this solid background, in 2007, a joint venture between Auto-Gas Namibia and Pula Holdings Botswana saw land allocated to them by NamPort in Walvis Bay to put up a terminal with a financial backing of Development Bank of Namibia (DBN).

After the environmental assessments were complete, NamPort changed its mind saying it needed its land back so as to expand its port.

Undeterred by this setback, Auto-Gas Namibia looked for an alternative land from NamPort. Lüderitz was the next port of call. Consequently, it got all the clearance from the Government and the environmental assessment bodies gave it a nod.

This time, it planned to go bigger and better and resultantly, it brought in a technical partner; Emirates Gas, which is under the Emirates National Oil Company to build them a terminal.

“Arabic countries are leading the world in terms of mineral and oil explorations. Where can you get better partners in the world as they have ventured in similar projects in Djibouti, Morocco and have bought out a lot of big companies in the world?” Asks Mendonca.

After the completion of the construction of the terminal gas, it is envisaged that gas will be 20-40% cheaper than we currently get from South Africa. Meaning that gas will be much more affordable in the years to come and readily available for the other SADC countries; a big bonus for the local industry and consumers.

The project is in three phases. First stage is to bring in LPG; second phase is de-gasification of gas and the third one, hopefully, power stations.

“It is cheaper to have a power station running on LPG,” says Mendonca adding that; “What we’re trying to do is play a very important role in these landlocked countries; to bring the international market to them. Namibia will be the entry point and Botswana, a distribution hub. It (Botswana) will supply to the southern parts of SADC while we will have a distribution hub in Katima to supply to the other side of the continent,” elaborates Mendonca.

At this moment, the company generates approximately 400 000 tonnes of LPG a month and with the commissioning and operation of the terminal in Lüderitz, gas will be made available SADC-wide and at a much cheaper price.

For the past five years, Auto-Gas has been funding and training young people in vocational institutions. The company went out of its way and hired expert lecturers from Australia and Italy to train the youth to be fully equipped with knowledge of gas.

Auto-Gas has had its fair share of achievements in capital projects such as all the gas pipes at Ohorongo Cement as well as at the new Coca Cola Plant, which at first had an under-par job done by a company from Cape Town. Mendonca says that Coca Cola had to get a referral from Ohorongo Cement, after handling the job and Auto-Gas had to redo the job.

Auto-Gas also re-valves old cylinders whose usual cost is N$600 and it gives them a new touch and sell them for N$200 as its social obligation.

“Capacity building is the most important part as there are so many elements of business with the introduction of the gas corridor but the main objective is to avail easy, sufficient, cheap gases,” emphasises Mendonca.

He adds: “We can support the Government through the UN environmental climate change programmes as they have signed a policy on carbon emission reduction and all other gases that harm the environment.

“However, we could only do that if the Government policies in place, which also exist in first world countries like converting taxis to run on gases as they are the highest pollutants,” state the environmentally concerned MD.

The use of and handling of gas a rings the safety question, for which Mendonca explains “In Namibia, gas was perceived to be the most dangerous thing and our Environmental Act did not allow conversion of fuel to gas. However, the Act was later changed and through the permission from Ministry of Mines and Energy, with campaigns in and around the media fraternity, Auto-Gas has tried to illustrate and educate consumers more on the safety and use of gas to prevent accidents.

Looking into the future, the next five years will see Auto-Gas being on the next level of exploration of other useful gases and not only focus on LPG.

The company has a staff complement of about 123 in all the depots countrywide and that is expected to grow with the terminal’s commissioning.

“The industry of energy is ever-growing and is a reality. The necessity to divert from the use of petrol and electricity to gas and become self-sustainable is mounting. There is no reason for Vision 2030 if we cannot sustain ourselves,” concludes Mendonca. PF