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Background

The Natural Gas Access Improvement Project was designed to support the Bangladesh government’s energy policy and help address the country’s energy infrastructure needs. The Asian Development Bank (ADB) financed the project through two project loans aggregating $262 million and approved in March 2010.  The Export–Import Bank of Korea (KEXIM Bank) joined ADB as a co-financier, pledging a loan of $45 million for the project.  However, due to disagreement with the government on financing terms, it withdrew its financial support during the initial stages of implementation.

The project’s envisaged impact was increased and more reliable access to natural gas in Bangladesh to support sustained economic growth.  Its expected outcome was expanded capacity and improved efficiency in gas production, transmission, and distribution systems. Seven outputs were identified at appraisal: (i) construction of the 61 kilometer (km) Ashuganj–Bakhrabad gas transmission loop-line; (ii) construction of gas compressors at Ashuganj and Elenga; (iii) control of gas seepage in the Titas gas field and development of four wells; (iv) installation of 845 km of pipelines in the southwestern gas distribution network; (v) introduction of prepaid meters for domestic consumers and remote sensing meters for industrial consumers; (vi) feasibility studies for energy efficiency improvements; and (vii) capacity building of the executing agencies (EAs).

But several changes were made to the project scope, some due to factors that could not have been foreseen during the design phase and were beyond the control of the project, and others due to weaknesses in due diligence and lapses in adopting appropriate mitigating measures. For example, the significant reduction in gas supply and consequent suspension of providing new gas connections to households were not foreseeable at project design as the government had identified importation of liquified natural gas and new drillings as strategies to meet the increasing gas demand and any supply shortfalls. However, due to delays in implementing these strategies, the project scope under output 4 was changed following the new government policy on gas connections.  Some components of output 1 were dropped from the project scope, after the cancellation of KEXIM cofinancing, and similarly for output 5, due to the much higher bids received than estimated at appraisal.  These changes were appropriate and did not affect the achievement of project outcomes.

At completion, the project substantially achieved its target outputs. Out of the 11 output indicators, 7 were exceeded/achieved, 1 was partially achieved, 1 was not achieved, and 2 are likely to be achieved by 2021.  Output 7 and the installation of prepaid meters (output 5) exceeded targets, and the remedial measures in the Titas gas field (output 3) were completed on time. Albeit with delays, outputs 1, 2, 6, and the identification of the causes of gas seepages in Titas gas field (output 3) were likewise achieved.  Dropped from scope was the installation of remote sensing in large consumers (output 5).  Targets in the expansion of natural gas distribution capacity and annual gas savings, due to the reduction of distribution losses, are likely to be achieved with the completion of related works in 2021.

Because of substantial output deliveries, the project achieved its intended outcome.  Non-bulk consumer losses were reduced to 2%, and actual losses to 1.7% or lower throughout 2011–2018. The target of 20% increase in household gas cost recovery was achieved through a tariff increase of 35% while maintaining costs at stable levels. Gas transmission capacity rose, reaching a total capacity of 4,000 million cubic feet per day against the 3,500 target.

Due to the project, the people have had greater and more reliable access to natural gas.  As a result, the percentage of population using natural gas as primary energy source consuently more than doubled, from 5% in 2008 to 13% in 2018.  By improving access to a clean and efficient fuel, the project also contributed to ADB’s current results framework, specifically mitigating climate change by (i) increasing the proportion of the population relying on natural gas as a low-carbon primary fuel, and (ii) establishing natural gas infrastructure to reduce overall carbon emissions.

The project had four EAs: Bangladesh Gas Fields Company Limited (BGFCL), Gas Transmission Company Limited (GTCL), Sundarban Gas Company Limited (SGCL), and Titas Gas Transmission and Distribution Company Limited (TGTDCL).  Petrobangla, an umbrella organization of the Bangladesh gas sector, coordinated the EAs, all of which are its subsidiaries.

Project Information
Project Name: 
Natural Gas Access Improvement Project
Report Date: 
August, 2020
Country: 
Project Number: 
Report Type: 
Project/Modality: 
Project loan
SDG: 
Goal 8: Decent Work and Economic Growth
Goal 9: Industry, Innovation, and Infrastructure
Goal 13: Climate Action
Loan Number: 
2622, 2623
Source of Funding: 
OCR
Date Approved: 
26 March 2010
Report Rating: 
Successful

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