LPG gas crisis not going away anytime soon

Staff Correspondent

Consumers have been going through a liquefied petroleum gas (LPG) crisis that has been going on for almost fifteen days. But the government has not yet been able to find an effective solution. The government is unable to control private traders to deal with the crisis. Sudhijan believes that even though the government has said that it will import LPG if the situation does not return to normal, this is just talk. Rather, the government has exacerbated the crisis with these words. Because the government does not have the necessary capacity and infrastructure for importing, bottling and marketing LPG. Sudhijan called for taking quick and practical steps within the existing system to alleviate the suffering of the people without exaggerating. The big LPG importing companies are also unable to import as government officials are harassing them in various ways. This is further intensifying the crisis.

The private sector controls about 98 percent of the country’s LPG market. The government company’s share is only 2 percent. The government does not directly import LPG; it supplies the market to a limited extent by processing condensate from gas fields and bottling LPG from the Eastern Refinery.

Energy Advisor Fauzul Kabir Khan said, “98 percent of LPG is in the hands of the private sector. Everything that needed to be done on our part has been done. Now the only way open is for the government to go for LPG import.”

He further said, “Keeping in mind the suffering of the customers, we have held several meetings with the LPG Traders and Distributors Association. There is no option but to increase imports to overcome the crisis. Traders have also been given permission to increase imports. Hopefully, the situation will normalize very soon.”

However, according to those concerned, even if the government imports LPG, it will not be possible to quickly resolve the crisis. Because it takes time to bottle LPG after import and reach the customer and requires a large-scale infrastructure. As an alternative, the use of an unused company’s infrastructure can be considered, although the existing system involves a long process including tendering.
Meanwhile, to overcome the financial crisis of LPG traders, the government has recently issued an order allowing them to take loans within 270 days after opening a letter of credit (LC). In addition, VAT on LPG has been reduced to 5 percent. However, the benefits of these decisions will be seen after the new LC is opened and LPG arrives in the country. Those concerned say that it is not possible to resolve the ongoing crisis before that. Usually, it takes at least two months from opening an LC to import, bottling and distribution.

Regarding the cause of the crisis, a businessman related to the sector said, Bashundhara has the most extensive network at the grassroots level in the LPG market of Bangladesh. Currently, they are not able to import sufficient amount of LPG. The condition of Beximco and S Alam Group, two companies that had a monopoly in the market during the previous Awami League government, is also weak now. Earlier, the government used to provide various facilities including financial assistance and dollar resources. Now, the crisis has arisen due to the lack of that assistance.

It has been found that in December, only 10 out of 23 companies in the country actually imported LPG. The remaining 13 companies could not import. The importing companies are Omera, Total Gas, Delta, Fresh, I Gas, Jamuna, Petromax, BM Energy, Senakalyan and Laughs.

According to industry insiders, the reduction in supply by major companies in the market has created a crisis among dealers, distributors and retailers. Some of them have started buying cylinders in advance and hoarding them, which has further exacerbated the crisis.
In this regard, LPG Operators Association of Bangladesh (LOAB) Vice President Humayun Rashid said that there are 28 licensed LPG companies in the country. Out of these, only seven to eight companies could import regularly. The remaining companies could not import due to various complications.

He said that LPG cargoes have already started arriving little by little. The market situation will return to normal in the next 10 to 12 days.

He also said that taking advantage of the crisis, some people have deliberately increased prices, which has created panic in the market. Hopefully, that too will pass quickly.

Regarding the solution, energy expert Professor M. Tamim said, “The obstacles to LPG import must be removed quickly. If necessary, a decision must be made to give concessions in some cases, considering the suffering of customers.”
He said, “The bigger problem here than the price is the crisis. If there is no supply according to demand, there will be suffering.”

It is worth noting that the government LPG company LP Gas Limited has two main plants in Chittagong and Kailashtila, Sylhet. The combined annual production capacity of these two plants is about 33,000 metric tons. Of this, the production capacity of the Chittagong plant is 25,000 metric tons and the Kailashtila plant is 8,000 metric tons.

On the other hand, the annual demand for LPG in the country is about 1.2 to 1.6 million metric tons. Although the government has been talking about increasing the capacity of LPG import and bottling for a long time, there are allegations that it has not been effectively implemented in reality.