Gr anting green energy status to the LPG sector by the Energy Division, to ensure clean cooking for all, is a transformational and timely policy decision. Bringing LPG-sector loans under the Green Fund framework will signi?cantly help secure investments in the sector and revive operators who have already become ?nancially distressed.
ultimately, consumers will bene?t from this initiative.
at the same time, if the government introduces a program to provide one LPG cylinder free of cost to each household, even while keeping LPG prices unsubsidized, it would be possible to bring 75-80 percent of households under clean cooking by 2030.
these views were expressed by Abu Sayeed Raza, Chief Marketing Of?cer (Sales and Marketing), Meghna Fresh LPG Limited, in a discussion with Energy and Power Editor Mollah Amzad Hossain. How do you assess the recent LPG supply crisis in the domestic market? What preparations should be taken to prevent similar crises in the future? Both domestic and international factors contributed to the current situation. During winter, monthly LPG demand in Bangladesh increases by 25,000-30,000 tonnes, starting from November. Due to market distortions, ?nancial losses, and banking constraints, many operators lost their import capacity during this peak period.
in November, about 140,000 tonnes of LPG were imported, rising to 155,000 tonnes in December. Some operators even brought their December cargo forward into November.
imports in January are expected to remain between 130,000 and 150,000 tonnes.
although 23 operators have import facilities, only 5-6 companies were able to import LPG during this period.
in addition, US sanctions imposed on 48 companies and vessels involved in transporting products from sanctioned countries severely disrupted global LPG supply and shipping availability.
this further constrained imports.
it should also be noted that operators have no direct control over retail pricing.
even when operators supplied LPG at regulated prices through rationing, shortages emerged at the retail level. Returning to normalcy may take until mid-February.
to prevent such crises in the future, the government must help ease operators’ ?nancial burdens and remove approval barriers for capable importers-steps that the Energy Division has already begun by allowing additional imports. Declaring LPG as green energy has also opened the door to concessional loans from the Green Fund.
in my view, alongside operators and LOAB, the Energy Division must actively monitor demand trends and ensure timely imports.
at the same time, stronger market monitoring is essential to ensure consumers receive LPG at regulated prices. Despite meetings between LOAB and the Energy Division and ongoing efforts by BERC, the cylinder shortage and high prices persist. How long will consumers continue to suffer? Once a supply disruption occurs, it inevitably takes time to recover- especially for a strategic commodity like fuel. Due to the Energy Division’s initiatives, the LPG dealers’ strike has been withdrawn, and operators have received approval for additional imports. However, the current level of supply is insuf?cient to meet total market demand.
it may take 30 to 45 days for the situation to stabilize fully.
although 56 companies received licenses to invest in the LPG sector, only 28 are currently active.
of the 23 companies with import and bottling infrastructure, only 6-7 are importing LPG. Why has this happened? Bangladesh’s LPG market has experienced intense competition. During normal times, 12-kg cylinders were often sold BDT 30-40 below BERC?xed prices.
to stay in business, many operators sold at minimal or zero pro?t.
as this trend continued for years, most operators became ?nancially distressed. Without policy support to revive them, banks will face mounting non-performing loans, and long-term supply security will remain at risk. Currently, Fresh, Omera, BM, Jamuna, Petromax, Delta, iGas, and Total can import LPG regularly.
another 7-8 companies import for six to seven months each year.
the remaining operators have almost entirely lost their import capacity. Some argue that excessive investment caused today’s crisis, while others blame rising interest rates, currency depreciation, and inadequate cost re?ection in BERC’s pricing. How do you see this? The claim of overinvestment is incorrect. Bangladesh currently has around 55 million LPG cylinders, along with bottling plants, import terminals, and transport infrastructure.
the sector currently supplies 1.5-1.8 million tonnes annually, but its actual capacity exceeds 3.0 million tonnes. However, BERC’s pricing mechanism cannot fully re?ect several cost factors. Operators had to purchase dollars atrates higher than of?cial benchmarks for extended periods, but these costs were not fully recognized in pricing.
at the same time, bank interest rates increased sharply. Moreover, to expand the market, operators subsidized up to 70 percent of cylinder costs. Combined with regulatory complexities and tax burdens, these factors signi?cantly affected investors. Without addressing these structural issues, ?nancial stress in the sector will persist, undermining both supply security and consumer welfare.
over the past 25 years, the LPG market has grown from just 40,000 tonnes annually to between 1.3 and 1.8 million tonnes. How do you assess the future growth of demand in the domestic market? And beyond residential use, how much potential do you see for expansion in autogas and industrial applications? Bangladesh has approximately 45 million households.
of these, only about 4.3 million households have access to piped natural gas, while around 10 million households use LPG.
another 700,000 to 1 million households use improved cookstoves.
that means nearly 30 million households remain outside the clean cooking ecosystem. Yet, under its SDG commitments, Bangladesh aims to ensure clean cooking for all by 2030.
to achieve this goal, there is no alternative to LPG.
in my view, domestic LPG demand will exceed 3 million tonnes by 2030. However, unless the ?nancially distressed operators are brought back into full operation, meeting this demand will be extremely dif?cult. Due to the shortage of natural gas, industries are increasingly being forced to use LPG, even though it is more expensive than natural gas.
industries prefer LPG because it ensures an uninterrupted supply. With proper policy support and cost rationalization, LPG use in the industrial sector could expand signi?cantly.
autogas is another important area. Currently, about 5 percent of natural gas is used in CNG vehicles.
the import cost of LNG is now around BDT 55 per cubic meter, while CNG is sold at BDT 43.
although autogas prices are approximately 30 percent higher than those of CNG, their usage is increasing steadily.
if BERC sets CNG prices on a subsidy-free, monthly adjustment basis-similar to autogas-it would be possible to gradually replace CNG with LPG in the transport sector. To ensure clean cooking in the residential sector, the government could consider subsidizing cylinder prices or providing the ?rst cylinder free of cost to new users.
the current production cost of an LPG cylinder is about BDT 3,000.
operators subsidize and sell it at around BDT 1,000, which makes rapid market expansion ?nancially unsustainable for them. If the government provides the ?rst cylinder free of cost, 75-80 percent of households could be brought under clean cooking within the next ?ve years. Consumer rights organizations have alleged that the current crisis is the result of excessive pro?t-seeking by operators and regulatory failure by the Energy Division and BERC. How do you view these allegations? These allegations are completely unfounded. Such claims are made without understanding the LPG sector or examining the full set of facts. Recently, the Energy Division announced ?ve initiatives, including declaring LPG as green energy, facilitating LC opening and loans through Bangladesh Bank, recommending reductions in advance income tax and VAT at import and bottling stages to the NBR, and approving pending proposals for additional imports. How bene?cial will these measures be for operators, and will consumers bene?t? After a long time, the Energy Division has taken bold and people-oriented steps. Declaring LPG as green energy is a breakthrough.
the decision to ease LC opening and ?nancing through the Bangladesh Bank is equally important.
if the entire LPG sector’s investment is brought under the Green Fund, it would play a transformative role in reviving distressed operators.
additionally, the Energy Division has recommended reducing the 4.0 percent advance income tax at the import stage and the 7.5 percent VAT at the bottling stage.
the approval for additional imports will also increase market supply.
in my assessment, if these measures are implemented effectively, consumer prices could be reduced by at least BDT 100 per cylinder. With LPG now declared green energy, access to concessional loans from Bangladesh Bank’s Green Fund is expected. What initiatives might LOAB take in this regard? LOAB has welcomed this decision by the Energy Division. We have already initiated steps to submit a proposal to the Bangladesh Bank, requesting that LPG sector loans be transferred to the Green Fund following its green energy designation. We are hopeful that the Governor of the Bangladesh Bank will respond positively.
it is often said that due to inadequate bulk import infrastructure and regulatory challenges, LPG prices in Bangladesh are higher than in India.
the Energy Adviser has also stated that a 12-kg cylinder should sell for BDT 1,000. How do you assess this statement? The statement that a 12-kg cylinder should cost BDT 1,000 has sent a negative signal to the market.
even with full knowledge of international and domestic LPG markets and pricing mechanisms, such remarks are not desirable.
that said, removing barriers to business expansion would indeed allow consumers to bene?t from lower prices. For instance, operators currently need 27-28 licenses per bottling plant, costing nearly BDT 30 million annually.
introducing a singlewindow service through BERC or the Energy Division would signi?cantly reduce costs and bene?t consumers.
another issue is the requirement to establish a testing laboratory at every bottling plant, which is unnecessary. Instead, centralized testing laboratories could be set up at technical institutes or universities in Dhaka, Khulna, and Chattogram, with operators accessing services on a fee basis. Fresh LPG’s market share is growing rapidly. What strategies are you planning for future expansion? Private investment in Bangladesh’s LPG sector began 20 years ago, and Fresh entered the market as an operator in 2018. Within seven years, we have become one of the market leaders. Meghna Group of Industries aims to ensure clean cooking fuel across the country. From the outset, we established bottling plants in multiple locations. Currently, we operate bottling plants in Sonargaon (Dhaka), Bhaluka (Mymensingh), Bogura, and Mongla, along with two import terminals. Following approval for additional imports to address the current crisis, we are actively sourcing LPG from new international suppliers. Fresh LPG will continue working to maintain market leadership and strengthen consumer trust