The stage was all set for the 5th Annual Asia LPG Summit in the International Convention City Bashundhara on 16 January 2018. With the aim of conveying the importance of building a safe and sustainable future of the energy sector with particular emphasis on the role of Liquefied Petroleum Gas (LPG), the two-day long program educated stakeholders on international LPG policies, regulations, and practices. The summit was graced by Amir Hossain Amu, MP, Minister of Industries, GoB; Md. Tajul Islam, MP, Chairman, Parliamentary Standing Committee, Ministry of Power, Energy & Mineral Resources; Salman F. Rahman, President of LPG Operators Association of Bangladesh (LOAB), and Michael Kelly, Deputy Managing Director of World LPG Association (WLPGA) among others as the guests of honor. The event comprised of several workshops that addressed the various challenges that the LPG market will need to overcome and how the development of this sector can potentially take Bangladesh to newer heights. Some of the key messages delivered during the seminar have been highlighted below.
POWER AND GROWTH: A SYMBIOTIC DYNAMIC
As you have heard today, the Bangladesh government has been actively supporting as well as promoting the use of LPG in Bangladesh. The reason for this is that we have depended on natural gas for far too long for all our energy requirements. Bangladesh has been witnessing tremendous growth, especially in the last 9 years. If we take a look at our macroeconomic figures, we have been growing at a rate of 6.5% every year. This trend has caused an increase in exports and foreign exchange reserves. However, the most significant increase has been regarding our power generation. The bulk of our power generation is based on natural gas, and because of this growth, our utilization of natural gas has grown tremendously. We are now in a situation where to cater for future growth; the government has decided to import liquefied natural gas. Due to these circumstances, the government decided that for domestic use and transport, we should shift from natural gas to LPG. Even in small industries, due to not receiving the required gas pressure, there has been a tendency to shift to LPG.
PARTNERSHIP THAT CREATES PROGRESS
We formed the LPG association last year, and since then we have been working closely with the government, particularly the Energy Ministry, Metro Bangla and Bangladesh Petroleum Corporation, to formulate proper rules, regulations, and policies so that the industry could be regulated properly. We had two issues that we put a lot of emphasis on. One was safety, and the other was quality. With the full cooperation of the government, Metro Bangla and BPC, the association formulated the rules that are now in place. From the association, we still have a lot to do, especially when monitoring is concerned. We find that there are still practices taking place which are not safe in the industry, and now the association’s first task is to monitor and control the people who are not following the rules to ensure safety and quality.
IMPORT STRATEGIES: MAKING LPG AFFORDABLE
Until now, all the LPG which we are importing is in small pressurized cargo vessels. This mechanism is increasing the cost by nearly a $100 per ton. If the operators can import the cargo in refrigerated vessels, this money can be saved. This import process is a significant detriment for the increase of the market capacity in Bangladesh because if we saved this money, the cost of LPG would come down significantly. The government is also looking into this. There are initiatives from both the government and private sectors in place, and hopefully, within the next couple of years, we will have the infrastructure in Bangladesh to bring in LPG in refrigerated cargos. I am very confident that the LPG business in Bangladesh will be a potentially growing business, and in the years to come we will see this develop into a substantial contributor to the national economy.
INNOVATORS BY NATURE: FOLLOWING OUR FOREFATHERS
Our honorable Prime Minister Sheikh Hasina realized that for Bangladesh to be a developed country, we need to meet certain logistic criteria with energy being one of the fundamental ones. Our country was dependent on agriculture, and for modernization of the sector, we needed energy and power. Generation of this power requires a vast natural gas input and to meet this demand through our sources; the question arises: “Should we continue using natural gas for cooking?” This was when LPG came to prominence. Due to a cross-sectional approach by the government for economic growth, the demand for LPG is going up. Because of this development, rural people can afford LPG.
NATIONAL ADVANCEMENT IS AN INTERSECTORAL UNDERTAKING
The growth of the LPG sector is enhancing the growth of other sectors such as the agricultural sector and service sector. LPG has also enabled us to meet the huge electricity demand of the industrial sector. We have to emphasize and give importance to LPG for which the government needs to ensure the development of the private sector as it contributes a lot to the energy sector. I hope that more people both local and foreign get involved and invest in the energy sector, especially the LPG business. LPG opportunities in Bangladesh will be going up day by day, and we must continuously work to ensure that it is more affordable for the people through policy support and regulations. I believe that if the government and private sector work together, we will be able to reach our goals.
FOLLOWING THE PROACTIVE ACTIONS OF LEADERSHIP
Under the dynamic leadership of Honorable Prime Minister Sheikh Hasina, Bangladesh is emerging as an essential economic player internationally. The country has achieved the capacity to generate 16,350 megawatts of electricity, and 83% of the total population now has access to electricity. However, with rapid industrialization and need for affordable energy, the LPG industry had made a definite presence in Bangladesh since 1998 when private sector companies started distributing LPG. At present, both national and international businesses are involved in the industry, some even under a joint venture. We have an estimated market of 1 million tons out of which 60% is accounted for by local productions and imports. LPG is gaining a lot of popularity, especially in rural areas. The government has generated a substantial amount of LPG cylinders to reduce the dependency on natural gas. Moreover, more than 900 licenses have been issued in favor of different companies producing strong LPG cylinders.
THE ROLE AND PRODUCTION OF CLEANER ENERGY: LOCALIZING LPG PRODUCTION
LPG has been defined as a clean source of energy, and its use is aligned with our commitment to achieving the SDG set for 2030 which includes industrialization, quality growth and access to affordable, clean energy. However, for the sustainable growth of the sector, it is vital that we carefully plan and create ideal policies. The industry might be growing, but there are issues which are concerned with storage and bottling capacity especially in gas deficient areas. Currently, the ratio stands at 80% import and 20% local production; we must promote local production through incentives and tax rates. Another crucial factor is ensuring safety and affordability. LPG operators near rivers are also restricted to receiving to only 2,500 metric tons due to drafts and this in return results in higher cargo charges. I firmly believe that summits like these will educate stakeholders on international LPG practices, standards, and benchmarks. This will help us reshape the future of energy and LPG in Asia.
RECOGNIZING THE POTENTIALS OF NATION
The World LPG association has a lot of resources that the Bangladesh LPG industry can tap into. We have requested to join from FBCCI so we can bring in the different products that are available to the world to Bangladesh market. It is not only the gas cylinders but also the synthetic gas that can be made from LPG, area-based solutions, and more efficient procedures to deliver these products to the end users.
IT TAKES A UNITED NATION
We should be following and practicing our business in strong conformity to these policies. Anyone who does not share our vision for energy solutions can deter the growth of LPG in Bangladesh.They may spread misconceptions about our practices and because this a new product; this miscommunication will hamper the industry. It can elude the confidence of consumers in Bangladesh.
A summit of this kind can increase awareness among our operators to all activities around this area to ensure that we are not doing these types of practices. As LPG operators, we are committed to maintaining a global standard in Bangladesh and shouldn’t compromise on those issues.
We have been telling the government that automatic pricing is a great advantage. Automatic pricing is the system where you pass the best prices on the market to the consumers. We have actively considered this to be the best policy. However, I would like to request our operators to ensure that we maintain reasonable pricing. We must make sure that there is healthy growth for everyone. A reasonable margin is a key to the industrial growth of LPG.
MOVING AWAY FROM TRADITIONAL ENERGY SOURCES
It is no mystery that that energy is a key indicator of a nation’s overall economic and social development. Looking at the present energy scenario in Bangladesh, electricity demand has significantly increased over the last 2 years. Most of the Bangladeshi power plants are heavily dependent on fossil fuels, and since maximum fossil fuel is imported from overseas, a power failure has been an acute problem and is vastly affecting the socio-economic development of the country.
Bangladesh is heavily relied on natural gas, especially when it comes to electricity. A possible alternative for the country could be liquefied petroleum gas, and it’ll be beneficial to our economy in three ways. Firstly, It will help the nation to get over the dependency on domestic natural gas. Bangladesh is a fascinating and appealing market for LPG because of the use of natural gas. The LPG conservation is very low compared to other Asian countries. So the market potential is very high here as the government has decided not to give any natural gas connections in the new households. Moreover, the average family incomes have been growing consistently over the last decade. There are 34 million households in Bangladesh, but only 4 million have easy access to natural gas and LPG.
THE PETROLEUM PROSPECT
There are considerable prospects in LPG in automobile sectors. It has a significant advantage on octane and CNG. There are about 3.5 million vehicles in our country among which about 165,000 are private cars that are currently running on octane and CNG. I hope the LPG conversion will start its operation soon to convert the CNG vehicles into LPG vehicles. If everyone works together, LPG will play a significant role in Bangladesh in the future.
Due to the high calorific value of profane, we can go for profane based electricity production; this is something the government can look into. The government has introduced rules and regulations for the storage, import, and distribution of LPG. We are confident that the new regulations will ensure the safety and protection of the LPG industry. On the other hand, monitoring is also needed so that the rules are correctly implemented.
THE CHALLENGES AND PROSPECT IN THE ENERGY MARKET
There are some challenges for the development of sustainable LPG market, of which, affordability is the most prominent challenge. If international LPG price goes up significantly, it can affect the growth of the LPG market. Infrastructure is another challenge for the growth of the LPG industry. The industry will need to facilitate storage and bottling capacity at different places. Aligning with the Bangladesh government’s mission regarding LPG prospect and development, BM Energy, under the brand name BM LP GAS, has emerged as one of the leading LPG operators in Bangladesh, making a substantial impact in overall industrial growth.
BM Energy possesses the largest reserve of LPG with 9700 MT storage capacity, and we are continuing to expand the capacity to meet the growing demand. We have an import terminal in Sitakunda with a storage capacity of 6500 MT. Automated and state of the art bottling system are installed in the plant which enables 1200 cylinders per hour production capacity. A satellite LPG filling plant, which is the country’s first semi-buried mounded tank with a storage capacity of 200 MT is located in Gazipur. The second largest LPG import terminal with 3000 MT storage capacity in Khulna is now under construction, which will enable us to extend production capacity up to 3600 cylinders per hour.
Moreover, a cylinder manufacturing plant with a production capacity of 220 cylinders per hour is ready to operate in Chittagong. We also created a robust distribution network with 300 distributors and 10,000 retailers across the country to make LPG available in every corner. Energy Ministry has awarded LPG Operator License to BM Energy before anyone else to establish 400 Autogas filling stations across the country. There are already more than 60 autogas agreements, and much more are in the pipeline. The bulk sales of BM Energy are the highest in the industry enabling continuous support to other players who require fuel for operation. Overall BM Energy is investing heavily in LPG establishments for keeping a firm grip over the market so that we can always remain aligned with our vision as well as serve our domestic, commercial and industrial customer with our wide range of services.
TAKING ON SMARTER TRENDS: COMPANIES IN THE LPG MARKET
The growth of LPG industry within Bangladesh has been changing by the increasing demand of LPG in household, commercial and industrial sector as a replacement of traditional fuel like coal, kerosene, and others. As per the announcement of the Energy Ministry mineral resource division, LPG will ultimately replace the natural gas shortly.
LPG has already become a popular alternative fuel in Bangladesh. All the LPG operators are investing a huge number of funds for the installation of plants, importing LPG, importing and manufacturing LPG cylinders. Presently, the total LPG imported by the private operators in Bangladesh is around 700,000 MT per year. Out of this volume, Jamuna Gas itself imports around 120,000 MT through its terminal at Mongla port. The volume of LPG imported by the operators has increased quite significantly. Our sister concern, JB Cylinder Ltd., produces over 2,000 cylinders per day and around 600,000 cylinders per year. Aside from that, we are also importing cylinders on a regular basis to meet the demand.
JAMUNA GAS: A MAJOR PLAYER IN THE LPG FRONTIER
Jamuna Gas has already started its LPG operations vigorously throughout the country so that it can remain as one of the top two operators of LPG in Bangladesh. Expansion of storage and filling capacity of Jamuna Gas is a continuous process. By 2021, the import volume is expected to exceed 300,000 MT per year. Once the cylinders reach the new villages and ensure good supply door to door with affordable prices, we believe the demand for LPG will increase fast.
The government of Bangladesh has been encouraging the setting up of LPG Autogas stations, not only in the main highways but also in the cities and towns, including automobile workshops. Jamuna Gas will be setting up LPG Autogas stations as well as conversion stations in various locations in Bangladesh. I’d like to point out that if the tax imposed on LPG related businesses are a bit more lenient, the entire industry will find importers galloping ahead, and along with that, the development of Bangladesh will also find a renewed pace.
APPLYING INNOVATIVE ENERGY TO THE EVERYDAY
Bangladesh is experiencing the growth of LPG equipment and volume of LPG are increasing day by day. We can see that this is garnering international attention; compared to the 150 during the previous year, there are 250 foreign delegates registered for today’s event. Furthermore, there are 90 companies in attendance. For many years, we have seen an abundance of CNG stations throughout Bangladesh; there is approximately 600 station. Many of them are not converting to LPG stations, and they have obtained the necessary permission and permits for them to operate as such. This is a growing trend because of the ease of transition and massive market. Many cities have yet to adopt the LPG trend equating to a higher price. I’m looking forward to sharing a platform of knowledge about the benefits of LPG in the next two days.