By Nico van Niekerk, VP-Business Development Africa (AG&P)
Over the past 20 years, the Republic of Mauritius’ annual growth rate has averaged 5.4%, stimulated by diversification from a sugar-cane monocrop economy, to sugar, manufacturing (mostly textiles and garments), tourism, and more recently, ICT, seafood and financial services*. This sustained economic growth has triggered a sharp increase in electricity consumption and new demand in recent years. Forecasts**by the Central Electricity Board (CEB), project the demand for electricity will continue to grow between 3.43% – 5.55% annually over the next five years to 2022.
So, how can the Mauritian government modernise energy infrastructure to support this economic growth? How do they pragmatically balance the desire to shift to a low carbon, efficient and environmentally friendly energy system with the need to establish stable and affordable power supply for this new generation of power and industrial customers? The answer appears to lie in making liquefied natural gas (LNG) readily available by integrating it into the country’s current energy ecosystem in the most cost-effective way.
A history of demand
In the 1990s, the country’s economic diversification resulted in structural changes in the domestic economy which saw the annual increase in consumption of electricity average more than 9%, while demand rose by more 8%. This trend continued post 2000, propelled by growth in the hospitality, commercial and manufacturing sectors. In response, the government invested heavily in improving infrastructure to cater to this ever-increasing demand for power.
As automation begins to gain further traction in Mauritius, it is imperative to secure a stable and reliable power system. The power sector must maintain a high reserve margin, supported by well-developed maintenance systems. Without oil, natural gas or coal reserves, Mauritius must import approximately 80% of its energy requirements in the form of heavy fuel oil, gasoline, diesel, kerosene, liquefied petroleum gas (LPG) and now LNG. The remaining energy is drawn from local and renewable sources such as bagasse and hydro. The government therefore needs to invest in infrastructure to support both the import of these fuels as well as a domestic distribution network to deliver fuel to an increasing base of end-users.
Looking to the future
LNG is gaining popularity worldwide as the energy fuel of choice. Beyond the financial benefits, it has a key role to play as an inter-generational transition fuel as it is a cleaner fossil fuel than oil and coal and is also versatile, with potential uses ranging from power generation to use as a transport fuel. The emissions of carbon dioxide, nitrogen and sulphur oxides and other particulates are also significantly lower for natural gas compared to petroleum alternatives, so switching to LNG will support Mauritius in transitioning to a cleaner energy future. With extremely competitive pricing and very favourable contract terms, the challenge for LNG is to make it accessible.
As a starting point, Mauritius needs to invest in a well-functioning LNG supply chain for importing, storing and distributing LNG. Despite the substantial capital expenditure requirement, if the CEB employs an innovative approach and strengthens its collaboration between the public and private sectors, the sought-after transition to LNG as a key fuel source could become a reality sooner.
Collaboration and innovation – the keys to accessibility in Mauritius
Recognising the rising need for LNG infrastructure assets, especially in African markets such as Mauritius, AG&P is building on its established modularisation business to develop a leadership position in the delivery of LNG to smaller power companies and stranded industrial customers via LNG receiving terminals and the supply chains emanating from them. A key part of developing the LNG market includes reducing the size of the current equipment traditionally used in the baseload market. Therefore, building highly cost-efficient receiving terminals and break-bulk facilities, as well as having smaller carrier vessels operating from these terminals to serve distant customers is very important.
This is where AG&P can make a real difference. We are leading the way in the development of efficient and scalable LNG solutions that provide customers with the right sized and priced infrastructure to support their use of gas. AG&P’s unique approach includes designing, building, financing and operating LNG terminals and the onshore delivery networks that deliver gas directly to customers in the same way that oil and diesel are currently delivered. AG&P’s scalable regasification terminals are set up to receive, store and re-gasify LNG with modular designs that can be scaled to meet demand. These terminals are suited to locations such as those found along Mauritius’ vast coastline where there is limited space, difficult-to-access areas and lower energy demand, so large-scale regasification is not feasible. Building the right sized LNG facilities is not only more economical for these areas, it is faster and offers flexibility.
If such an approach was adopted in Mauritius, it would allow the CEB to develop its infrastructure organically in a manageable, demand-specific timeframe within its budgetary parameters. This would require lower capital investment and assets would become operational much earlier, providing a faster return on investments. In other words, this approach would enhance power affordability, reliability and access.
With high unmet demand, the time is right for a more innovative approach to LNG distribution in Mauritius. Natural gas is now more available, affordable and competitive than liquid fuels, making it ideal for efficient power generation. Coupled with the diminishing attractiveness of coal or oil-fired generation due to environmental considerations and the availability of new proven technologies, there is a two-three-year window for developing commercially viable LNG import terminals to serve the increasing energy requirements of the country’s underserved, off-grid power and industrial customers.