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‘LP gas cylinder prices to drop further’

  • Published at 12:38 am October 1st, 2017
‘LP gas cylinder prices to drop further’

The use of LP gas is steadily increasing in households and restaurants. What do you think are the reasons behind this expansion?

The use of LPG has recently grown compared to the last few years. The government has introduced new policies to promote and regulate the sector. The number of companies selling LPG cylinders has also gone up significantly. One of the major reasons for this shift is that the government has stopped giving new gas connections to households, and kerosene is comparatively expensive as fuel. LPG is relatively cheaper and environment friendly. So, more and more customers are opting for it. The countrywide demand for LPG was approximately 100,000 tons in 2013, which currently stands at around 600,000 tons. So, we can safely say that the sale of LPG cylinders is booming.

The government recently issued a Statutory Regulatory Order (SRO), and withdrew the 15% VAT for importing LPG cylinders. It will cause the prices of LPG to drop in Bangladesh. What do you think about this?

As the 15% VAT on the import of new LPG cylinders has been withdrawn, the market prices will surely reflect this. However, the HR coil price internationally has increased significantly for the last few months making the cylinders costlier. Also because of demand and approach of winter, LPG contact prices in the international market has increased.
The LPG cylinders can be made more available to the customers. If the licensing process is made easier, the sector will continue to expand
In spite of these international factors which are beyond our reach, the exemption of VAT from imported cylinders is a positive decision by the government and the ultimate benefit of this price adjustment shall be passed on to the general people of Bangladesh.

Customers often complain over differently priced LPG cylinders from different companies. What can be done to resolve the issue?

Despite the complaints, the prices of LPG cylinders with gas from different companies have stabilised. But, the differences in prices will continue to exist. It is a company’s duty to safely deliver LPG cylinders to the doorstep of a customer through its dealer agents. There is, however, no government or non-government data on the current demand for LPG cylinders in the country. Consumers are believed to be using 600,000 tons of LP gas per year, and the demand is steadily increasing. Around 10 LPG companies are currently selling gas cylinders in Bangladesh and they set different prices as their wish. But, you have to keep it in mind that, this is a competitive market. A number of new LPG companies are set to enter into the Bangladeshi market soon, and the gas cylinder prices are expected to drop further.

There have been media reports about gas cylinders explosion. What are the cause behind the explosions?

There could be a multitude of reasons for gas cylinder explosion. Illegally filled cylinders, sub-standard valves and lack of awareness of the customer could result in an explosion. A company could face severe penalties for such an incident. The department of explosives can hold a company accountable for gas cylinder malfunction or explosion. We must ensure proper safety measures and raise awareness regarding the issue, as the use of LPG cylinders is on the rise.

Do you think the government should implement measures to regulate LPG cylinder prices and ensure safety measures to prevent explosions?

The government has licensed these companies for selling LPG cylinders. The authorities have the jurisdiction to monitor the sector, and they should do so regularly. The government can set proper industry practices, safety standards and compliance – which will finally ensure quality and safety of the gas cylinders, with cooperation from the related companies. It will be difficult to regulate price in the market, but setting up proper business ground will help the country get affordable LPG.

What steps should the government take to expand the use of LPG cylinders in regions that lack supply of natural gas?

The government has already licensed to 40 privately owned companies for building LPG bottling plants in Bangladesh. This is an important step towards ensuring the energy security of the people. The government has also taken the initiative to build more LPG plants, which will help expand the sector. The authorities should monitor the standards and experience of these newly licensed companies to ensure a safe LPG sector.

What are the hurdles to making LPG cylinders more easily available to customers?

The LPG cylinders can be made more available to the customers. If the licensing process is made easier, the sector will continue to expand. The biggest challenge for new LPG companies is to find to good location to set up bottling plants. A company can face difficulty in finding a good location for its plant, even after securing funds and getting license. The government wants to deliver LPG cylinders to the customers through private companies, and this could act as a hurdle to the [development of the] sector. Both the government and the private sector entrepreneurs should cooperate with each other to find a way to resolve the issue.
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