1. Stakeholders Effects:
a) Customers effects: Currently, about 90% of natural gas in Bangladesh is used to generate electricity, with demand from both domestic household and industrial segments expected to grow substantially. However, there is a daily shortage of natural gas of approximately 1,000 million cubic feet (mmcft/day) which might cause major disruptions to the economic activities if remain unaddressed. Due to the shortage of natural gas, LPG is even more needed now especially by the domestic households as natural gas is increasingly diverted for industrial and power sector use. The Project will help minimize the shortage gap and address the lack of storage facilities that have become the bottleneck in the distribution chain by increasing the storage capacity at various stages in the value chain. The other bottleneck is in the downstream logistic services, where certain locations are hard to reach or that the transport lead time is long, both due to the constraints in the transportation infrastructure. The Project will help smoothen the distribution of LPG to the end users by constructing capacity barges, cylinder carrying barges, and upgrading the LPG road tankers fleet. This will direct and indirectly increase the reliability of supply by shortening the delivery time and lowering the transportation costs, and to ensure end customers will have access to LPG when they need them.
b) Distributors effects: OPL has established a strong distribution channel with more than 200 distributors across the country. OPL is now present in more than 22,000 retail points in the country, and has presence in all the administrative sub-districts of Bangladesh. The project will increase economic activity of these distributors and retailers, most of them MSMEs, due to the higher volume of LPGs and number of cylinders being distributed to the end users. By 2020, additional 2.1 million cylinders will have been distributed to the market and by 2018, additional 3,000 retailers will have been added to the distribution network.
2. Contribution to Market Creation:
a) Resilience: The project will help create a more resilient energy system through promotion of supply diversification, by helping a private sector player such as OPL deliver LPG to the market. The Project also supports the Government of Bangladesh's policy to dedicate the natural gas production to power generation and industrial consumption, which are currently facing erratic and short supplies. Allocating more natural gas to power generation and fulfil the demand of the household segment with LPG will not only create a more resilient energy system but also lead to better manufacturing productivity and thus generate greater economic value from scarce natural gas resources.
b) Sustainability: This project will support the promotion of LPG which has low greenhouse gas emission characteristics when compared to for example, conventional cooking fuels such as firewood, kerosene and charcoal. Usage of these conventional cooking fuels have reduced drastically in rural Bangladesh, but represent still around 75% of the consumption of cooking fuels, so there is a big potential for LPG to reduce greenhouse gas emissions. Inefficient cooking emits greenhouse gases such as carbon dioxide and methane, and aerosols such as black carbon. Better access to LPG in rural areas of Bangladesh through new distribution networks will provide a cleaner and efficient fuel than biomass, reducing overall emissions and thereby improving overall health of the local population. Unlike firewood and charcoal, LPG is easy and instantaneous to light, easy to control so that the required rate of heating can be obtained. LPG does not produce any smoke or soot therefore in overall is more environmentally friendly and sustainable compared to conventional cooking fuels.
