Government involvement and control, business opportunities and profitability, and bottled LPG supply at an affordable price are the three objectives of a new LPG project in Puntland. HCL’s SE4All TAF team lays out the business plan for increased access to LPG in 9 large cities within a Public Private Partnership (PPP) type of venture between the Government and private investors.

As in most other countries in Sub-Saharan Africa, wood is the main energy source in Somalia -either directly as firewood or indirectly in the form of charcoal, with devastating effects on the environment and health of the populations.

The issue has already received attention by the Government of Puntland, inspiring initiatives to scale up use of liquid petroleum gas (LPG) as a substitute fuel. The Government has conceived an LPG project to allow increased access of LPG Bottles to a large number of households and commerce for cooking and other domestic use. The plan is for the LPG project will be rolled out in 9 large cities in the region, which have witnessed population explosion, and whose residents rely almost exclusively on charcoal and wood for their energy needs. The city of Bossaso, with a population of 700,000 inhabitants, has been identified as the main centre for storage, bottling and distribution. The port of Bossaso will be the main point of unloading of imported LPG which will be transferred to a new storage and bottling centre via a new dedicated pipeline. LPG bottles will be filled with LPG to be transported by road trucking to the designated 9 cities across Puntland.

The filling/bottling plant will be located in Bossaso, and the LPG will be transported in bottles by road tankers or Lorries to the nine towns where distribution centres will allow the LPG bottles to reach the end users.

Introducing the Government into the LPG supply chain for affordable and available fuel

A series of SE4All TAF-led workshops and meetings has helped draw a LPG project map with focus on introducing the Government into the supply chain, reviewing LPG Price Control, and preparing the expansion of LPG use in Puntland.

Being a developing country, demand for LPG in Puntland will be largely driven by affordability and availability – compared to charcoal and wood. The present organisational set-up of the LPG supply chain in Puntland is operated fully by the private sector without any form of state intervention. The private sector is therefore fully in control of the LPG Import and distribution in the country, for a market which is considered quite limited. The Government of Puntland wishes to take control of the LPG supply chain -aiming to make it more affordable.

Guidance is provided on the project layout, implementation structure, and contractual aspects

Following a study of the technical, economic and contractual aspects, the HCL SE4All TAF team redefined the project layout to suit the findings: the location of the LPG storage and filling plant, the type of contractual agreement between the Government of Puntland and the private Investors, project management and the provision of LPG Cylinders. The appropriate contractual frame work allowing a fair partnership between the Government and the private sector (under a PPP framework) has also been structured and agreed.
The results and findings of the TAF studies are to be fine-tuned and shared with the local Puntland Stakeholders within the context of the follow-up mission, where the proposed storage and bottling site will be visited along with the related existing utilities (such as the port facilities, the electrical power grid, the access roads). It is expected that the site data will enable to complete the design and specify the scope of the next phase of the project execution.

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