LPG price mechanism in the offing
“We want to focus on three issues: developing a mechanism to control overpricing in the market, ensuring the safety of cylinders and setting up a regulator,” he said.
A policy on LPG will be introduced within one or two months, Hamid said.
LPG will be supplied at affordable rates in 70 percent areas of Bangladesh in next three years as the government’s target is to increase its use mainly at households. Its consumption in automobiles and other areas will also go up as the fuel is cheaper compared to diesel.
Hamid spoke at the inaugural session of “fourth Asia LPG Summit 2017” at the International Convention City Bashundhara in Dhaka.
The World LPG Association or WLPGA organised the summit, the first in Dhaka, in association with the power, energy and mineral resources ministry.
Over 100 petroleum companies from 20 countries are participating in the three-day summit.
Hamid said the price of LPG is high in Bangladesh because the country does not have a deep-sea terminal. “If we can bring big ships to the port, the cost will go down by about 30 percent.”
The government plans to set up a deep-sea terminal and some investors have already shown interest to invest.
He said the terminal will be set up within two years and will be able to supply LPG at lower cost.
Currently, the price of a 12.5kg LPG cylinder is no more than Tk 1,100, according to Hamid. He said the Department of Explosives is very weak and the government plans to revive it by hiring consultants.
Salman F Rahman, president of the LPG Industries Association of Bangladesh, said the price of LPG should be fixed in line with global prices. “We will sit with the government soon to formulate the price mechanism so the price reflects the fluctuation in the global market price.”
About 285 million tonnes of LPG were consumed globally in 2015 and the sector is worth $250 billion, according to a keynote presentation of David Tyler, director of the WLPGA. LPG consumption in Bangladesh was 350,000 tonnes in 2016 and it is estimated to go up to 1 million tonnes by 2020.
He said the majority of LPG is being consumed in Asia, mostly in China and India. “The demand is growing incredibly fast in Asia,” he said.
North America and the Middle East is the major exporter of LPG but their consumption has remained static in the last 10 years. “The LPG business is shifting to the Asian market,” said Tyler.
According to the presentation, the largest demand of LPG in global market is in the residential sector which consumed 44 percent in 2015. The demand of LPG in chemical and refinery sector was 33.5 percent, industrial sector 13.1 percent and transport sector 9.3 percent.
He said Bangladesh’s residential sector consumed 12 percent or more of the natural gas produced in the country. “If we can provide the households an alternative then we will be able to free up more gas for industries. The benefit of using natural gas in industries is more than in households.”
Tanzeem Chowdhury, assistant general manager of Omera Petroleum, said Bangladesh imports most of its fuels. So it is rational to increase the use of LPG in the households and other sectors. The current shortage of natural gas is 22 percent of the daily demand, he said.