Gas moratorium fuels demand for costly LPG

Demand for liquefied petroleum gas (LPG) is growing fast following its growing use in rural areas as an alternative to firewood and government moratorium on natural gas connection.
Sector-insiders say a wide demand-supply gap fuels the LPG prices, and the government, as such, is thinking about fixing its rates and licencing more companies in the business.
The alternative fuel is mostly imported as the country has got only two plants in public sector.    
The sources also attributed the significant demand hike to a gradual rise in use of LPG by hotels and restaurants in all areas of the country as they are switching to the liquefied gas from kerosene and other fuelling options.
According to them, demand for LPG in the country has been growing around 12-15 per cent over the last four to five years and may grow more than 15 per cent in upcoming years.
"We are witnessing a significant rise in LPG demand in recent years. Now the country has around 0.2 million tonnes LPG demand," said Mir Ali Reza, head of marketing of Bangladesh Petroleum Corporation (BPC).
Mr Ali Reza said capacity of the existing LPG companies--the BPC and 10 to 12 private LPG companies (importers)--is not sufficient to meet the existing and growing demand for the petroleum fuel in the country.
Currently, he said, more than 80 per cent of the LPG demand is met with imports while the state-owned BPC supplies the rest 15-20 per cent.
"Now the private importing companies supply 1.14 to 1.5 million tonnes of LPG and BPC supplies around 16,000 tonnes. The total capacity of the importing companies and BPC combined is still around 0.5 tonnes less than the existing demand in the country," he added.
Mir Ali Reza said in view of the growing demand-supply gap and the capacity of the existing companies, the government recently approved 40 companies to deal in LPG with a view to making it available everywhere in the country.
"We think once the approved companies enter the market, the consumers will be benefitted to a great extent in terms of cost, availability and quality," the BPC official added.
Fath-hul Kabir, a deputy manager of Totalgaz Bangladesh, told the FE that they were also witnessing LPG demand rise and trying to reach more customers across the country.
"As a multinational company we have to go on by strictly complying with the rules and regulations of the company and cannot suddenly increase the capacity in Bangladesh. Totalgaz Bangladesh is also enhancing its capacity to provide an affordable, flexible, cleaner and controllable LPG to meet its growing demand here," he added.
However, Engineer Md. Anisur Rahman, Planning Manager of Titas Gas Transmission and Distribution Company Limited, told the FE that the country's LPG-importing companies need to ensure competitive price like that of natural gas and price rate of BPC. They should also focus on security issues.
"Leakage of LPG cylinder may cause destructive explosion as it is heavier than wind. I think the companies need to ensure distinct quality cylinders so that any accident doesn't happen," Mr. Rahman added.
Now the price of a 12.5-kg cylinder of LPG marketed by BPC is Tk 700 while private companies charge around Tk 850 to Tk 900.
Sources said a move is underway by the government to fix the LPG price at retail level and make putting price tag on LPG bottles mandatory.
They said once the system is in place, companies have to sell at government-specified rates and then the total price will be Tk 703 for public-sector companies and Tk 733 for private companies.
Alongside the BPC, other major LPG providers in the country are Totalgaz, Omera Petroleum Limited, Bashundhara LP Gas, Bin Habib Bangladesh Limited , Super Gas (T K Gas), Jamuna Sapecetech Joint Venture, Klean Heat Gas and LAUGFS Gas. Totalgaz and LAUGFS Gas PLC are only two multinationals in the business.
BPC has two plants for LPG--one is Chittagong LPG plant which has the capacity of 10,000 metric tonnes and another one Kailashtila plant which has the capacity of 7000 metric tonnes per year.
Private-sector companies import the fuel from Singapore, Malaysia, Saudi Arabia, Abu Dubai and Kuwait.
On the other hand, the current operations of the importing companies can be broken down as: buying bulk LPG from foreign refineries or traders - shipping the bulk LPG to their terminals in Bangladesh via oceangoing gas carriers, storing the bulk LPG into spheres or bullets via jetty pipeline - and finally filling the gases into pressurized cylinders for onward distribution to the final consumers.
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