Use of LPG rises sharply

FE Team | Published: December 10, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

Arafat Ara The use of Liquefied Petroleum Gas (LPG) has registered a sharp rise over the months following the suspension of new gas connections to households and industrial units by the authorities, the market operators said. According to them, the annual sale of LPG was 50,000 tonnes in 2010 while it could reach 90,000 tonnes by the end of this calendar year, reflecting an 80 per cent increase. Due to a short supply of natural gas, the government had suspended new gas connections to households in the country since July, 2010 and also to industries sector since July 2009. Country's overall natural gas output is now hovering around 2,020 million cubic feet per day (mmcfd) against the demand for over 2,500 mmcfd. Market operators said around 12 per cent of the country's total natural gas production is being used by households for cooking. Firms involved in LPG businesses are making hefty profit due to sudden rise in LPG demand. Many of these firms have already doubled LPG imports to cope with the mounting demand for the same. "We're receiving good responses from consumers in recent times," said Bashundhara Group Deputy Managing Director Mustafizur Rahman. He said consumers, especially those who purchased new apartments after the restriction was imposed, had to rely on LPG to meet their fuel requirement for cooking purpose. "And their number is increasing gradually," said the official of Bashundhara Group, country's leading LPG importer. The company has doubled its LPG import to 30,000 tonnes in 2011 from the previous year's 15,000 tonnes. According to Real Estate and Housing Association of Bangladesh (REHAB), some 16,000 ready apartments remained unsold over the past one and a half years mainly due to halt in gas connection. If the government does not lift the embargo, the realtors will be in great trouble from early 2012 when nearly 22,000 more ready flats will be added to the list of the existing unsold apartments. The realtors have started negotiating with the LPG firms for having cylinder gas facility to facilitate disposal of their ready flats, which remained unsold for months only for not having gas connections, said Khizir Ahmed, Head of Marketing & Sales of Bashundhara LP Gas Ltd (BLPGL). "We have already signed deal with 20 such real state developers to provide LPG," said Mr Ahmed. Kleenheat Gas Limited General Manager Saidul Islam said they have increased LPG imports by 2,000 tonnes to 15,000 tonnes in 2011 from the previous years' 13,000 tonnes seeing a steady growth in LPG use. "We're also negotiating with the real estate companies as LPG can only help resolve the crisis in the housing industry," he said, the demand for the bottled gas would further increase in future if the restriction continues further. Titas Gas Transmission and Distribution Company Limited (TGTDCL) Managing Director Md Abdul Aziz Khan told the FE they had received nearly 0.15 million (150,000) applications of fresh gas connection seekers since the bar was imposed. "Of the applications, around 99.99 per cent have come from household users," the TGTDCL MD informed, adding that the government plans to promote LPG in place of piped gas for the households to reduce pressure on the use of natural gas. The key official of the company also said only industries and CNG (Compressed Natural Gas) sector will come under the piped gas connections. "So, LPG is the right option for domestic use". But the LPG consumers are angry because they have been forced to spend extra money to purchase the fuel. Shajeda Akhtar, an LPG user, who lives in Eastern Housing apartment at the city's Purana Paltan area, said she uses two bottles of LPG having 12.5 kg each for cooking per month spending Tk 2,900. But the piped gas users spend only Tk 450 for their monthly gas consumption, she lamented. She also mentioned the LPG burners were costlier compared to usual natural gas burners. "As low quality burner consumes more gas we are bound to use high priced burner for saving the fuel," she added. Price of a LPG burner varies from Tk 3,500 to Tk 14,000, said Ms Akhter. "Although the government has waived import duty and taxes on LPG and LPG cylinder accessories, the price of the gas is yet to reasonable," said another LPG user Arifur Rahman. He said the authorities should make the price of LPG rational to cut extra expenses of customers. The government 'zeroed' import duty on LPG from the previous 5.0 per cent in fiscal year 2011-12. The authority also lowered the import duty on raw materials and accessories of LPG cylinder within the range from 2.0 per cent to 9.0 per cent. "We feel the woes of LPG users and trying to lower it's price for customers," said Bashundhara Group DMD Mustafizur Rahman. "To reduce the cost we have recently launched operation of a 100,000 LPG cylinder making plant per month," said Mr Rahman. He said his firm will initiate operation of a new LPG bottling plant, which will double Bashundhara's LPG bottling capacity. He hoped that their firm will be able to market LPG at lower prices from January 2012 with the operationalisation of the new plants. "Our company is trying to make LPG available in every corners of Bangladesh at an affordable price," Mr Rahman said. Private firms can supply around 80 per cent of the local consumption while the state-owned LPG producer provides the rest. A number of private firms are now engaged in marketing of LPG in Bangladesh including Totalgaz, Bashundhara, Kleenheat and Jamuna Spacetech. Beyond the importers, recently government has awarded 22 new licences to private entrepreneurs to build liquefied petroleum gas (LPG) bottling plants and market to meet the country's growing LPG needs.