Feasibility study on a robustly equipped mobile LPG delivery truck for refilling gas cylinders and canisters.

Abstract

LPG is a vital source of energy required for numerous household, commercial and industrial purposes. Its consumption however has remained significantly low in Uganda and this can be attributed to the fact that it is more expensive than the more popular alternatives of charcoal and firewood. Furthermore, the supply and ease of access to LPG is only limited to urban areas, mainly Kampala and surrounding areas with rural and upcountry residents having minimal or no access at all. LPG is a cleaner energy alternative than wood fuel and it comes with several other advantages over its counterparts such as relative ease of use, being quicker to set up and immediate in its delivery. The use of LPG however suffers from the ever present possibility of it running out when least expected. An issue which is only exacerbated by the fact that refilling procedures and deliveries are characterized by massive delays and inconsistencies leaving users frustrated and with no option other than waiting. This therefore necessitates the need to significantly improve and streamline gas delivery within the town and wider areas of the town. As a means to address this, this study assesses the practicality and profitability of operating an LPG delivery truck that is capable of regularly refilling client’s gas bottles minimizing the possibilities of running out. An estimation of past and present LPG demand was done to enable forecasting of future demand. Available LPG supply was determined by establishing the volume of LPG inputs into the country. With an understanding of supply and demand, the existing market opportunity was identified and a suitable bulk LPG truck was sized. Investment requirements and the costs involved in purchasing and running the truck are detailed. Following, projected sales and income was established for subsequent years. Finally, business appraisal computations such as NPV, IRR and PI were utilized to ascertain the feasibility of the investment. Results showed that the investment is economically viable as the NPV obtained was a positive. The IRR obtained was greater than the borrowing rate and the PI was greater than one. In addition, the payback period was a relatively short 3 years and 11 months which all generally points to a feasible investment.