The Case for a Switch to

LPG Liquefied Petroleum Gas Presentation to Business Innovation Facility By. Oando Marketing Plc NOVEMBER, 2011

The Right to Win 2011 2

Content

• Executive Summary … the LPG story

• Energy Consumption Patterns

• LPG Utilization Roadmap

• Why LPG?

• Oando Marketing’s Initiative

• Winning Strategy

• Distribution Network

• Impact of Initiative

• Oando Marketing PLC

The Right to Win 2011 3

Executive Summary . . . the LPG Story

LPG Market Potential – 1,500,000MT

Current Market Size – 115,000MT

-

10

20

30

40

50

60

70

80

90

Senegal Gabon Angola Cote d'ivoire Ghana Cameroon Rep. Congo Nigeria

LPG C

onsumption (Kg/H

ousehold)*

6th Largest Producer of LPG in the World

2nd Producer of LPG in Africa

150 million TOTAL POPULATION

25 million Households

Av. 6* person per household

Research shows that more customers are willing and ready to switch to LPG*

Change 73%

No change 27%

Willingness to Change Cooking Fuel

Gas, 54%

Kerosene 12%

Others, 7%

. . . here lies a big opportunity

Source: NNPC Annual Statistical Bulletin 2009

**CIA FactBook 2010 (Estimates)

$23.3b*

$26.2b*

* COUNTRY GDP 2009

$377.9b**

* *COUNTRY GDP 2010

$II.06b* $I3.2b*

The Right to Win 2011 4

Energy Consumption Patterns

• Presently, the top tier of the pyramid use Kerosene, LPG & Electricity for their cooking and heating needs.

• The Bottom of the Pyramid, which makes up the lower / rural class segment, rely on firewood and coal for their cooking and heating needs.

• Why the Gap?

• Cost of the initial investment in cylinders

• Cheap cost of alternatives

• Awareness

• Traditional consumption patterns

2.5%

38.5%

59.0% of the population

> 1500USD/

Year

> 500USD/

Year

< 500USD/

Year

Household Income

Immense opportunities exist in the mid/ bottom

tier of the pyramid!

* Source: World Resource Institute, The next 4 billon

The Right to Win 2011 5

LPG Utilization Roadmap Must be Premised on Efficiency & Social Benefits

100,000 ANNUAL DEATHS FROM INDOOR POLLUTION

8.5% ESTIMATED LOSS OF DISABILITY ADJUSTED LIFE YEARS

55.7% PERCENTAGE OF PRIMARY FOREST LOST 2000 - 2005

• The hazardous effects of using unsustainable and unsafe cooking fuels

The Right to Win 2011 6

Why LPG?

50% Heating Efficiency

Unit Cost

N3,300.00

28 Liters

KEROSENE

35% Heating Efficiency

Unit Cost

N3,800.00

132 Kg

FIRE WOOD

85% Heating Efficiency

Unit Cost

N2,800.00

12.5 Kg

LIQUIFIED PETROLEUM GAS

Save 100,000 lives yearly

Create 42,000 direct and indirect

jobs

Generate revenue for Government

Reduce global emissions

Reduce deforestation

Reduces Indoor Air Pollution

The Right to Win 2011 7

Oando Marketing’s Initiative

Oando Marketing PLC has developed a new market stream by targeting a segment that has not previously been targeted directly, despite their huge numbers:

Patented & specially designed 3kg LPG cooking stove

Re-worked Distribution Approach

5 million households

SWITCHED

This channel will consist of a vast network of dedicated wholesalers (O-Gas Distributors) servicing a dedicated network of retailers.

The Right to Win 2011 8

…. A Winning Strategy

Distributor

- A smaller LPG cylinder size that is Portable Easily stored Can be refilled affordably

- Vast distribution network where cylinders can be gotten and refilled 10 minutes from the end user’s home

- Awareness campaign that highlights the advantages of LPG and how to use it safely

- Access to financing options to make initial purchase of cylinder more affordable for the end user

The Right to Win 2011 9

Distribution network

At the center of the dedicated distribution channel is the O-

Gas distributor.

The O-Gas distributor manages the O-Gas wholesale hub and the network of MFs attached

to each distributor

Start

OMP LPG Terminal

O-Gas Distributor

Micro-Franchisee

End User

Oando is responsible for logistics of cylinders between terminal and distributor as well as sales and marketing support for the distributors

Each distributor is expected to drive the distribution and sales to the micro-franchisee and also invest in logistics support

The Right to Win 2011 10

• Over the next 5 years, OMP seeks to reach 5mn households (representing 19.2% of total), thereby generating 612,617 Metric Tonnes (MT) of LPG sales

580,570

1,035,420

1,415,666 1,542,379

1,388,377

Year 1 Year 2 Year 3 Year 4 Year 5

Cylinder Injection

Now Year 1 Year 2 Year 3 Year 4 Year 5

MFs 0 1,566 11,784 32,215 32,215 32,215

SDPs 0 67 495 1,351 1,351 1,351

0

200

400

600

800

1000

1200

1400

1600

0

5000

10000

15000

20000

25000

30000

35000

No

of

Seco

nd

ary

Dis

trib

uti

on

Po

ints

No

of

Mic

ro-f

ran

chis

ee

s

No of SDPs & MFs

Impact of Initiative

The Right to Win 2011 11 11

Oando Marketing PLC

The Right to Win 2011 12

Oando Marketing PLC: An overview

• 8 Terminals – 159.5m Litres capacity

• 3 Aviation Depots–3,000MT Combined Capacity

• Access to 13 government depots across the country (shared with other Majors)

• 2 Lubes Blending Plants –100m Litres capacity

• 7 LPG Filling Plants - 945 MT combined capacity

• Over 1,980 trucks through partnerships with several transporters

• Over 500 Retail Outlets across Nigeria

• Over 500 Industrial Customers (i.e. Direct Sales, Vendor-Managed Inventory, Value Added Peddling

The Right to Win 2011 13

Oando’s Gas Supply Channels

Enugu

Benin

Warri

Jos

Kaduna

Sokoto

Lagos

By depending on multiple sources for the supply of the product, Oando enjoys a reliable supply of LPG at all times

Sourcing • International market • NLNG off-takers • Government owned refinery

OMP’s LPG bulk filling plant

Logistic support

The Right to Win 2011 14

Thank You www.oandomarketing.com