KEPTAP
LPG DISTRIBUTION PLAN
Kenya Petroleum Technical Assistance Project (KEPTAP)
Enhancing LPG penetration in the country from the current 10% to a minimum of 70% by the year 2023. This translates to an increase from 2 kg/capita to minimum 7 kg/capita
Project Details
CLIENT: Ministry of Industry, Trade and Cooperatives | Ministry of Petroleum and Mining | National Oil Cooperation of Kenya
PROJECT SPONSOR: World Bank and Government of Kenya
ASSOCIATING PARTNER: Peeply (Socialcops)
BACKGROUND
The Government through the Ministry of Petroleum and Mining (MoPM) and the Ministry of Industry, Trade and Co-Operatives (MoITC) has been working with the National Oil Corporation Kenya (NOC-K) to enhance LPG penetration in the country as well as ensuring universal access of LPG in Kenya by the year 2020.
To support this project MoPM committed to purchasing 1.2 million 6 kg cylinders every year for four years. The cylinders will be distributed by NOCK to households that would hitherto not have afforded them. These cylinders are to be availed to the target households at a discount of up to 65% per cylinder. It is expected that NOCK LPG market share will shift to 30% by 2020.
THE ASSIGNMENT
At the consultancy’s inception i.e. in Jan 2018, the vast majority (over 75%) of Kenya’s households used biomass as their primary fuel. This has had a negative impact on the environment from deforestation for charcoal and firewood, to negative impacts on health particularly respiratory health due to indoor pollution as well as the overall impact on the quality of life for Kenyans.
In this regard, the Government has embarked on enhancing LPG penetration in the country to scale up uptake of LPG to 70% over a four-year period. This was aimed at reducing the carbon footprint (negative climatic effects such as deforestation) in Kenya, as well as negative health related effects (e.g. respiratory diseases) and enhancing the quality of life of Kenyans. The following were the specific development objectives:
- Reducing negative health impact associated with indoor pollution
- Reducing deforestation brought about by use of biomass
- Reducing amount of productive time spent by women & children in search of firewood
- Provision of entrepreneurship opportunities for at least 50,000** women & youth in the sale and distribution of LPG. According to estimates by German Development Institute, every 100MT of LPG creates 20-40 jobs along the value chain
- Improving overall quality of life in line with the Government aspirations of vision 2030
A key challenge that was been identified in successfully achieving these objectives as well as ensuring the sustained LPG uptake of the additional 1.2 million bottles provided by GoK every year, was the lack of a clear distribution model to be implemented by NOCK. In response to this, this consultancy, through the World Bank Kenya Petroleum Technical Assistance Project (KEPTAP), engaged ACAL in partnership with Social Cops (Peeply) to support NOC-K in the development of a robust distribution model to ensure that the GoK’s objective of enhancing LPG penetration realised.
OUR APPROACH
The overall objective of the our approach was to develop a comprehensive eligibility & distribution model for the discounted LPG cylinders taking into account the following:
- Mapping out of beneficiaries and the registration/eligibility plan for identified beneficiary’s execution plan for rolling out distribution of discounted cylinders
- Enhancing the current distribution model facilitating the NOCK market share of 450,000 cylinders to enable the distribution of the additional 1.2 million cylinders every year over four years to reach the target of 5M cylinders
- Mapping out the required distribution infrastructure (including storage and filling facilities, distribution centres, retail shops) to enable NOCK realize the target of an additional 5M
- Defining the social entrepreneurship engagement model for driving focus on women and youth as the principal partners for the distributorship model
- Establishing the resourcing requirements such as infrastructure for successful execution
- Developing Monitoring and Evaluation (M&E) mechanisms and tools to continuously gauge the success and sustainable impact of the project
SCOPE
This consultancy kicked off in July 2018 and ran all through to February 2020. During this period ACAL undertook desktop research, legal and regulatory framework review, benchmark studies, a market assessment, a national study, several stakeholder engagements and workshops with the primary objective of enhancing NOCK’s distribution model to accommodate an additional 1.2 million cylinders annually.
Our approach spanned across the following three phases and entailed the following key steps:
- Updated the Market Assessment and understanding of current LPG Market
- Undertook a benchmarking excersise to identify best management practices in LPG adoption and sustained use by summarising the key learning’s obtained from the benchmark studies among low and middle-income countries. These inputs greatly informed the development of the distribution plan and the beneficiary selection criteria.
- Assessed the current status of LPG distribution at a national level in Kenya. It spans across midstream, downstream and last mile aspects of the distribution structures and models. Following this, chapter six narrows down to look at the current status of NOCK’s LPG distribution plan with the aim of identifying improvement areas and strengths to build on.
- Conducted a National study to obtain updated insights around LPG penetration, key absorption challenges, consumption trends, distribution models, refill models etc.
- Developed a comprehensive criteria to enable the identification of the eligible beneficiaries of the discounted cylinders and aligning the proposed distribution model to optimally reach these targets. The consultancy finally developed a social entrepreneurship engagement model for driving focus on women and youth as the principal partners for the distributorship model.
- Undertook the optimal identification and mapping of rightful beneficiaries. This entailed a detailed analysis of demographic statistics, such as household income and expenditure, current fuel sources, household location, etc.), across every sub county in the country
- Developed an enhanced LPG distribution model. This model was designed to accommodate a capacity of 1.65M cylinders annually. It in a similar fashion covers midstream, downstream and last mile plans and models. It shows how the distribution plan will grow over short, medium and long-term periods.
- Developed a clear registration to payment process to ensure roll out of 1.2M cylinders per year for over a five-year period. This process included post payment tracking to ensure cylinders were safely installed and that continuous refills were subsequently carried out
- Developed an efficient, effective and sustainable delivery model that encompasses aspects such as social entrepreneurship engagement. This delivery model was based on an expansion of the current model by over 300%. The model complied with best practice standards with regards to various players (e.g. handlers and re - fillers) as well as infrastructure requirements
- Developed a social entrepreneurship engagement model for driving focus on women and youth as the principal partners for the distributorship model. This model presented the sample benchmarks considered, innovations, engagement models, templates and procedures.
- Developed a Monitoring and Evaluation (M&E) Framework detailing the M&E approach, guidelines, key focus areas, performance indicators and tracking activities.
