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16 February, 2018 00:00 00 AM

LPG for the masses

The domestic gas demand is mounting alarmingly since domestic gas connection ban in 2015
AKM Asaduzzaman Patwary
LPG for the masses

Bangladesh has a substantial dependence on natural gas use alongside domestic consumption due to its affordability and users’ convenience. The escalating demand and tariff of natural gas have caused uproar across the country resulting into multi-sector primary energy crisis. Power generation including captive power sector accounts for the largest gas consumption around 58 per cent whereas industrial consumption and domestic consumption share 15 per cent and 12 per cent respectively though domestic use of natural gas is on constant rise. On the other hand, the need of natural gas in other sectors marked a compounding growth like low cost power generation and CNG use. Against this relentless demand increase of natural growth, generation and supply growth efforts look very insignificant over the past years.

To get rid-off this crux, both the private and public sectors initiated different efforts. The domestic gas demand is mounting alarmingly since domestic gas connection ban in 2015 and almost 130 million of our population doesn’t have any access to natural gas yet due to inadequate supply network and falling gas reserve. The much talked about energy security in the context of Bangladesh is unrealizable if household energy issue for around 130 million people remains unresolved and unattended. Estimation indicates that household gas consumption share may soar to 78 per cent if entire population is brought under the conventional pipe lined gas which is unrealistic considering other pressing usage of gas.  

Under this circumstance, Government allowed private sector to introduce LPG cylinder gas as an alternative of conventional pipelines. There is variety of LPG cylinders in weight commercially available in market. Apparently, the cylinder gas is more expensive than household piped gas and is unaffordable for a large section of consumers. In spite of this, people, off late, depend on natural gas to meet energy need. Since our natural gas reserve and exploration is constantly declining, Government started encouraging and promoting LPG as an alternative domestic need solution even though the price of LPG is way beyond the affordability of mass people.

With this firm dedication and commitment of LPG availability for domestic consumption, Government meanwhile issued 48 new licenses for LPG business.

Let me share some critical observations to make mass people aware of some pressing issues on LPG availability in Bangladesh:

Government has got no assessment of required number of LPG cylinders for entire household consumption. Different sources refer that currently .6 million ton of LPG are processed in Bangladesh and significant share is produced under private-owned companies whereas BPC run companies produce only 20000 tons. There is no clear evidence of sufficient LPGs for bringing entire population under the LPG network.

The LPG cylinders are not easily affordable even though it is priced for customers of all sections. LPG processing and distribution companies are located in few locations and required logistics and supply chain network is inadequate to fast reach supply destinations which cause price variance across the regions as LPG was not planned to be only household solution even a decade ago. LPG plants are far from countryside’s citizens as plants are mostly located in Dhaka and Chittagong and nearby regions.

Since the gas pipe connection has not reached to the southern part of Bangladesh yet, the need of gas in that region is partially met by the LPG. Besides, a LPG processing hub with some plants is being built in Khulna using Mongla port access route.

Recently, Government took various initiatives including licensing Auto gas stations for LPG driven car usage reducing pressure on CNG, LPG driven electricity power plant and expansion of LPG processing in Chittagong eastern refinery.

India has got a flexible and effective LPG policy to bring in most of the people under the low cost gas use network as an alternative to places without natural gas network and protection measures of natural forest wood resource.

India, having limited intra country piped gas network, planned for using cylinder gas to regions out of natural gas connectivity area ensuring clean fuel for poor households and fuel subsidy reforms. India is considered the second-largest domestic LPG consumer in the world due its LPG consumption by households which has reached 19 million tons, registering 10 per cent annual growth and this scheme also aims to extend LPG connections free of cost for around 50 million poor households by 2019 which will be another milestone in ensuring access to energy in India.

The country’s central Government budget in 2018, unveiled the project to bring in 80 million people under low cost gas connectivity and Bangladesh may learn from the given scheme and endeavor to begin such kind of project for gradual development and providing household energy security across the country.

India and Bangladesh signed a deal to supply LPG cylinders to Northwestern states using river routes from Haldia port, Calcutta to Chittagong port. Bangladesh can take strategic advantage of this pipeline connectivity and processing centre to reach the underprivileged regions nearby seven sister borders and supply to districts nearby Chittagong.

LPG processing plants are to be increased, long term import deals of LPG from Indonesia, USA, KSA, Qatar, China, Russia and modern

technology transfer need to be ensured as USA and Qatar are large exporters of LPG.

Payra Sea port needs to have LPG processing terminal and other districts should develop infrastructure wise in that region for LPG plant approval so that the benefit reaches to countryside and economically marginalized section of people. Mongla port and adjacent LPG plants area transport infrastructure also need to be improved.

Private sector LPG investors can be subsidized in corporate tax to keep LPG tariff low and pass benefit to end consumers and allow renowned foreign energy companies to partner local investors in technology transfer and investment.

65 per cent of our total population is rural citizens and their level of disposable income and purchasing power is far behind from average purchasing power of urban citizens to afford expensive LPG cylinders. Therefore the potential LPG tariff for rural population need to be massively subsidized as par their standard of living to ensure that this large section of people come under energy security net.

To address the tariff variance challenge and ensure economy tariff for all LPG users, Government has meanwhile reduced import duty to 2 per cent from 200 per cent and gave 1000 new LPG refueling station licenses across the country which are in progress but the real benefit of lowered tariff of LPG cylinder across the country seems a far cry due to import market led price volatility and insufficient regulatory enforcement.

In cross country LPG tariff comparison, the most price competitive country is Indonesia having $0.22 per litre followed by India and china, Vietnam and Malaysia having $.55 per litre and least competitive is Bangladesh having $1.23 per litre. These four countries keep trying to keep LPG price affordable to encourage domestic LPG use.

However, to cater growing demand of LPG in Bangladesh and ensure one of the reliable sources of primary energy mix, LPG can play vital and useful role provided they have proper pricing strategy, LPG station licensing process requirement and relevant infrastructure. If Government really desires to meet the nationwide domestic gas need by LPG cylinders, it can undertake a long-term comprehensive and focused plan of actions and roadmap considering the policy requirements, regulations, necessary supply chain development, future needs, technical and technological efficiency, potential sourcing and tariff rise forecast and learning and awareness of risk factors and domestic users' and safety guidance, assessment of futuristic demand growth and scopes for use in industry and transport communication sector.

We have had insignificant experiences in measuring energy security and need assessment that holds us back and challenges the entire industry led economic growth in many respects. Learning from our harsh experiences, we should not repeat the mistake when it comes to the household energy security of 165 million people and growing number of households since household energy security is one of the integral enablers of inclusive, sustainable energy security led SDG implementation and materialisation of our momentous economic visions in Bangladesh.

The writer is Research Fellow,

R&D Dept., DCCI


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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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