Govt eases rules on setting up LPG plants
The government has eased restrictions on setting up liquefied petroleum gas (LPG) bottling plants and running LPG businesses by private sector to meet the growing demand for the item in the country, a top official said Friday.
The energy ministry decided to ease the restrictions in a meeting held recently.
"It will help encourage the use of LPG in households in absence of piped gas, and also reduce its price in local market," the Bangladesh Petroleum Corporation (BPC) Chairman Md Muktadir Ali told the FE.
He said as per the government decision the aspirant private entrepreneurs will not have to wait long for obtaining licences from different state-owned entities, including the BPC.
The energy ministry is now preparing a policy to help avoid the previous restrictions in setting up LPG bottling plants in the country.
As per the government decision, private firms will have 18 months to set up LPG bottling plant after receiving permission, he said.
The companies will also have to submit progress report on installation of LPG plants within the first three months after attaining the government nod. If the companies fail to fulfil the criteria, then their license would be cancelled.
The new LPG plants will be run initially on imported gas. But they will be able to use local gas, if the country explores sufficient gas, said the official.
The market players have appreciated the government move of easing restrictions on setting up LPG bottling plants.
"It will help flourish the sector and bring down LPG prices in the country," managing director of Jamuna Spacetech Joint Venture Ltd Belayet Hossain told the FE.
The LPG firms that had launched business earlier had to struggle hard initially due to various restrictions and complexities in policies, he added.
The BPC chairman said the corporation is now working to construct an LPG bottling plant at Kumira in Chittagong with a yearly capacity of 100,000 tonnes to popularise LPG use and ensure its availability. Fifteen firms expressed interest to build the LPG plant for the BPC, following an international tender in July.
"We are now evaluating their offers for selecting the most competitive firm," he added.
The country now consumes around 100,000 tonnes of LPG each year, mostly by the urban people in district towns and light-engineering workshops where piped natural gas connection is not available.
According to official statistics of energy ministry, LPG demand in the country is 300,000 tonnes per year. However, the BPC chairman said the demand will be over 500,000 tonnes per year.
LPG demand is increasing sharply with the government's decision of not providing fresh piped gas connections to households since July 2010. Besides, firewood accessibility is gradually shrinking and the price of kerosene is going up, resulting rise in LPG demand.
Officials said a favourable policy along with availability will popularise use of LPG across the country.
The government has already cut import duty on LPG, LPG cylinder and other accessories to reduce LPG price in domestic market and encourage its use.
It has already 'zeroed' the tariff on LPG import from the current fiscal year (FY), 2011-12. Import duty on raw materials of LPG cylinder has also been reduced.
The state-owned LPG producers now supply 20 per cent of the total market demand of LPG, while private players import the remaining 80 per cent.
The BPC pioneered LPG marketing in Bangladesh in the late 1970s. With the increasing demand in the mid-1990s the government allowed LPG import and permitted private entrepreneurs to invest in LPG storage and bottling.
Anticipating a huge demand of the fuel in the country, several multinational and leading local companies came forward and made investment in LPG import, storage and bottling during 1999 and 2001.