Soaring LPG demand in booming Bangladesh

If the Bangladeshi market was once desolate territory in terms of LPG businesses, today the country is booming with filling sites, storage tanks and vessels going in and out of Bangladeshi waters supplying the ascending number of LPG filling sites with the hottest fuel at the moment: Liquefied petroleum gas.

Traditionally, Bangladesh has been one of the world's poorest countries, but now the place is buzzing with an entrepreneurial spirit, new businesses popping up everywhere and an admirable work ethic. Bangladesh is going places and it's getting there quickly. The population is becoming increasingly wealthy and the industry in general is booming - two factors creating an enormous demand for energy. The demand for LPG in Bangladesh has grown at an exponential rate of 60% in the last three years, owing to the increasing suspension of natural gas connections and growth in the use of LPG as an auto fuel. If Bangladesh's gas demand continues to grow at the current pace of 7% per annum, the current natural gas reserve will be completely depleted by year 2022-2023, unless gas supply capacity is substantially added through new gas field exploration and development or gas imports.

Whereas the energy supply was previously ensured via natural gas, which is now in such low reserves that it's earmarked for the industry e.g. cement and textile, the Bangladeshi government decided to intervene and boost the sale and use of LPG to replace the scarce and now costly natural gas. Normally in Bangladesh, there is 20-40% tax on imported goods, but the government exempted the import of LPG from tax and reduced the tax on the import of LPG equipment to just 2%. This further incited the local companies to enter the LPG business. As the word about the exemption spread, the LPG industry started climbing and every domestic conglomerate worth its salt entered the business.

In future, LPG will be available in most areas across the country, which in turn will raise consumption substantially. Currently, LPG is available only in cities and their adjacent areas in the country, but with the erecting of the so-called satellite plants that enable LPG businesses to fill cylinders outside of the popular and rapidly crowding coastline with easy LPG access, LPG will also reach more remote, rural areas. By all appearances, the next big "thing" is going to be LPG auto gas. In fact, 250,000 vehicles are targeted to be converted to auto gas and over 1,000 auto gas station licenses have already been awarded.

In a country with 160 million inhabitants - a number only expected to keep rising - all relying on LPG for domestic purposes, a huge amount of gas cylinders is needed and demand is sky rocketing. To be more exact, the current LPG need is 1.5 million MT/year whereas the current LPG capacity in Bangladesh is merely 400.000 MT/year! Hence, action is being taken and at the moment there are 48 LPG licensees and counting, 43 filling plants are to be constructed, 23 LPG terminals are being built plus 16 more to come. In other words - the demand is going through the roof and experts estimate a 400% growth to be achieved within the next five years. This is not the time to be caught napping!