Bangladesh University of Professionals Journal BANGLADESH UNIVERSITY OF PROFESSIONALS JOURNAL
Article Info: BUP JOURNAL, Volume - 7, Issue - 2, December - 2019, Volume - 7, Issue - 2, Article #8
Publish Date: December 1, 2019
Authors(S): 1. Engr. Md. Anisur Rahman 2. Dr. A K M Nazrul Islam
DOI:
Keywords: Natural gas, Natural gas utilization efficiency, Financial analysis, Net present value, Internal rate of return, Cost-benefit analysis
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Abstract

The present paper deals with the cost-benefit analysis (CBA) for an energy-efficiency improvement project for the boiler-using
industries of Bangladesh. It considers five different price scenarios of natural gas (NG), a discount rate of 12% and the expected gas
savings of about 6.88% of the total gas consumption in these industries of Bangladesh. The output of CBA has been used to suggest
commensurate NG pricing and provide policy inputs for encouraging energy use efficiency among these end-users. The high IRR of 18%,which
is much greater that the hurdle rate 12%, at the present weighted average NG price of Tk.10.29 indicates that the project is worth
undertaking even at a financing rate below18% .NG price for which the project is financially viable (NPV=0) is Tk.9.52/cubic meter and
IRR at this price is 12.53% .The present industrial gas price is Tk.10.70 /cubic meter .Therefore, it is evident that this energy
efficiency project is financially acceptable at the present industrial price of natural gas. The IRR-NG price relationship reveals that
the project becomes more lucrative financially as NG price increases.