Demand for LPG in Bangladesh has seen strong growth in 2016 owing to the increasing suspension of natural gas connections and growth in the use of LPG as an auto fuel.
The cumulative growth of LPG in Bangladesh is around 12 % in the last couple of years.
An exponential move has observed by the government’s strategic policy on providing new gas connections in future.
According to State Minister for the Ministry of Power, Energy and Mineral Resources Nasrul Hamid, ‘Bangladesh plans to construct its first LPG-fired power plant to diversify energy supply sources and ease pressure on the country’s diminishing natural gas resources.’
It is expected that this move will add further momentum to the South Asian nation’s LPG demand growth.
The project will be led by business conglomerate Beximco Group, in partnership with its US-based technical partner General Electric, according to another senior MPEMR official.
The plant’s capacity and location are yet to be confirmed.
The project announcement follows the implementation January 29 of Bangladesh’s first policy aimed at expanding supply and boosting consumption of LPG, to replace natural gas in the power, transport, and industrial sectors.
While Bangladesh’s LPG consumption in 2016 was at around 300,000 mt, up from 200,000 mt a year earlier, MPEMR estimates that actual unconstrained demand could be around 500,000 mt as consumers are using kerosene and wood as alternatives to LPG due to lack of availability.
Under the new policy, the private sector is now able to set up LPG terminals, Autogas filling stations, auto gas conversion plants and LPG bottling plants.
Licensees have the authority to supply LPG to households, Autogas filling stations, and commercial and industrial clients through dealers or franchises, as well as export bottled LPG or LPG in bulk after attaining a no objection certificate from the Energy and Mineral Resources Division and the necessary approval from the commerce ministry.
EMRD Deputy Secretary Akramuzzaman said, ‘Once the new licensees start operations, LPG will be available in most areas across the country, which in turn will raise consumption substantially’
Under this policy, the government also aims to regulate LPG prices following consultation with stakeholders, but the date for the consultation is yet to be set.
LPG prices in Bangladesh are currently set by market developments, with private companies currently selling the 12.5-kg cylinder of LPG in the range of Taka 850 to Taka 1,000.
Above the fixed price of Taka 700 is offered by state-run Bangladesh Petroleum Corp.
State-owned LP Gas Ltd., a subsidiary of BPC, produces 20,000 mt/year of LPG.
Five more private companies — Laugfs Gas, Totalgaz, Bashundhara, Jamuna Spacetech and Linde — import a combined 280,000 mt/year from the spot market, leaving a supply shortfall of 200,000 mt.
Bangladesh has already issued 38 new licenses to private companies to build LPG storage and bottling plants for marketing the fuel in a move that is expected to further increase the country’s LPG demand.
The government has also issued nine licenses to companies that are already in the LPG business to help further strengthen their operations.