Projects

Preamble

To enhance the availability of petroleum products across the country, the Petroleum Fund commissioned a comprehensive needs assessment. This assessment evaluated the current state of the petroleum industry, identifying gaps in supply, distribution, and pricing. It focused on integrating critical elements of availability while recommending projects and financing models to address identified gaps.

The Needs Analysis Report outlines various projects aimed at ensuring the security of petroleum product supply throughout Lesotho. Some of these projects required further feasibility studies, while others were deemed ready for implementation.

 

The consultant proposed several key initiatives, including:

  • Centralised Information and Procurement System (CIPS)
  • Internal Distribution Network
  • Mobile Filling Stations
  • Network of Paraffin Automatic Dispensing Machines (ADMs) across the country

These projects are designed to improve the efficiency and reliability of petroleum product distribution, ultimately benefiting consumers and enhancing energy security in Lesotho.

CIPS

Centralized Information and Procurement System

The Centralised Information and Procurement System (CIPS) is a critical initiative developed and managed by the Petroleum Fund. This system is designed to streamline information collection and the procurement of petroleum products from key suppliers and storage depots. CIPS will also empower the community by enabling feedback on retailers and distributors, particularly in reporting shortages. Once fully implemented, the system will be integrated across all retailers, including traditional and mobile filling stations, storage depots, oil companies, Revenue Services Lesotho (Border Agency), internal distribution companies, and the Fund itself.   The primary goal of CIPS is to enhance reporting, data collection, and analysis for the Fund, creating a centralised platform where all stakeholders report crucial information. This project will improve access to timely and accurate data, which is essential for responding to supply shortages and ensuring equitable distribution of petroleum products. Key benefits of CIPS include:   ·       Improved access to real-time information and enhanced responsiveness to shortages. ·       Better planning and adaptation to shifts in demand and supply. ·       Enhanced information management and verification across different points in the supply chain. ·       The ability to detect and address losses in levy and tax collection. ·       Increased capacity to identify and enforce compliance within the petroleum sector.   The development of CIPS was completed, and a pilot phase was conducted between February and May 2023, involving the Maseru Bridge Border Post and one of the oil companies. The next stage of the project involves integrating CIPS with the systems of major stakeholders, allowing for seamless data sharing within the petroleum sector.

Mobile Filling Station Network(MFSN)

The Mobile Filling Station Network (MFSN) project is designed to improve access to petroleum products in Lesotho’s highland and rural areas, where distribution has historically been limited. By establishing mobile filling stations in key underserved regions, this initiative aims to ensure that communities in these areas have reliable access to fuel.

In addition to addressing fuel accessibility, the MFSN will create new opportunities for local investment and employment, stimulating economic growth in these regions. The project reflects the Fund’s commitment to both enhancing energy security and fostering economic development for the people of Lesotho.

Five districts have been identified for the initial rollout of the MFSN:

·       Mafeteng

·       Mokhotlong

·       Qacha’s Nek

·       Thaba-Tseka

·       Mohale’s Hoek

In November 2023, a stakeholder forum was held to gather feedback and consolidate the standards governing the operation of Mobile Filling Stations, ensuring the project is well-aligned with local needs and regulations.

LP Gas Cylinder Filling Stations (LPFS)

In collaboration with the Department of Energy and the Petroleum Fund, there is a study conducted to assess the market of the Liquefied Petroleum Gas (LPG) sector to improve safety, sustainability, and regulatory standards.

 

Objectives

Assess Consumption: Analyse current usage and future trends.

Identify Regulatory Gaps: Improve safety and sustainability.

Evaluate Pricing: Ensure transparency and affordability.

Promote Best Practices: Encourage safe LPG use.

 

Current Landscape

Energy Mix: LPG is 21% of Lesotho’s energy, mainly for cooking and heating.

Consumption Trends: Growth from 2012-2018, a 47% drop in 2019 due to COVID-19 and higher prices. Current consumption is 9,800 m³ annually, with 3.5% growth expected.

Imports: 20,640 m³ annually, with Afrox and Easigas South Africa holding 92% market share.

 

Challenges

Regulatory Issues: Unclear roles, resource constraints, and lack of safety enforcement.

Market Problems: Theft, corruption, illegal practices, and pricing issues.

 

Addressing these challenges requires stronger regulations, collaboration, and education to improve safety and responsible LPG use.

Paraffin Automatic Dispensing Machine (ADM)

This project aims to establish a nationwide network of Paraffin Automatic Dispensing Machines (ADMs), particularly in underserved highland and rural areas. These ADMs will provide a convenient way for consumers to purchase paraffin using prepaid cards or codes, similar to the process for buying airtime.  To maximise accessibility to illuminating paraffin, the machines will be strategically installed in central, high-traffic locations, such as near transport hubs, shopping centres, and other areas frequented by people on their way home from work   By leveraging existing infrastructure, the project can reduce setup costs by installing ADMs in leased spaces at established sites. The goal is to create a reliable network of paraffin access points across the country, allowing households to purchase fuel outside of regular business hours.   Location assessments for the installation of ADMs have been conducted alongside the development of Mobile Filling Stations to ensure optimal placement and accessibility.

Internal Distribution Network

As part of the Fund’s commitment to participating in the petroleum-related initiatives that are carried out by the Department of Energy (which is administered by the Ministry of Energy), the department has envisioned the project to create an Internal Distribution Network. This network is intended to empower local entrepreneurs and enhance the petroleum supply chain within the country.

This project will be aligned with the country’s Energy Policy, which aims to reserve the local transportation of petroleum products for Basotho entrepreneurs, promoting local ownership and economic growth of Lesotho.

Used Oil

Recognising the absence of proper management systems for used oil in Lesotho, and with a commitment to safeguarding human health and the environment, the Petroleum Fund carried out a comprehensive feasibility study that is aimed at implementing an environmentally sound management system for used oil generated from petroleum products. The study assessed the volume of used oil produced within Lesotho’s economy and evaluated the environmental impacts of current disposal methods. Additionally, it reviewed the existing legislative and administrative frameworks and explored the potential for establishing a commercialised used oil recycling industry, which could contribute to economic development and job creation.

By implementing this system, the Fund aims to transform used oil management into a sustainable practice that benefits both the environment and the local economy.

This initiative also aligns with the Fund’s broader goals of stimulating economic growth and creating job opportunities for Basotho through sustainable practices in the petroleum sector.

The feasibility study is now accessible on the Petroleum Fund website. Potential implementing partners are encouraged to review the study via the following link to explore opportunities for collaboration and mutual benefit.

Feasibility study for Recycling of Used Oil in Lesotho

HQ Building

As part of its 2020–2025 Strategy, the Petroleum Fund has identified Infrastructure Development as one of its seven key strategic focus areas. In line with this objective, the Fund is constructing a headquarters that will not only serve as its primary office but also generate additional income by offering office space, canteen services, and conferencing facilities for rentals. The adopted Financing Model to make this project a reality is through the Government Treasury Bonds offered by the Central Bank of Lesotho.

To ensure the success of this project, TM2 Consultancy was appointed as Project Manager. At the same time, the architectural and civil structural design services and supervision are entrusted to Trend Group JV. Additionally, the contractor for this construction project is Sigma Construction Lesotho.

Construction of the headquarters began in March 2024, with completion expected in 2026. This state-of-the-art facility will play a vital role in supporting the Fund’s operations and contributing to its long-term financial sustainability and asset diversification.

Strategic Fuel Storage Facility (SFSF).

In partnership with the Department of Energy, the Petroleum Fund is spearheading the development of the National Strategic Fuel Storage Facility in Lesotho. The primary goal of this initiative is to ensure a stable and reliable fuel supply during times of crisis, providing oil companies with access to petroleum products when needed. These fuel storage facilities will be strategically located in the North (Leribe), South (Mohale’s Hoek), and Central (Berea) regions of the country to optimise security of supply, accessibility, and distribution.

The main facility, located in Maqhaka, Berea district, is already under development. Additionally, the project has completed the Environmental and Social Impact Assessment (ESIA) and the Environmental and Social Management Plan (ESMP). We are now ensuring that the community affected by the project at the central site receives appropriate compensation for the land acquired for the construction of the Strategic Fuel Storage Facility.

Credit to Department of Energy( https://www.doe.gov.ls/post/view/34)