LPG investors and experts in Bangladesh assume that prices of autogas will fall with market growth, as transportation cost for road tanker becomes cheaper with the development of our infrastructure
Bangladesh is considered one of the fastest-growing LPG markets globally, and LPG experts of Bangladesh create diversified sectors of consumption in this small country. In Bangladesh, LPG is mostly (about 98 percent) import-based and in 2020 Bangladesh imports about 1.2 million MT whereas seven years back it was only 80,000 MT. LPG is cheaper than any other traditional vehicle fuels like petrol and octane in Bangladesh, and this is the biggest opportunity for the exponential growth of autogas in Bangladesh.
Government of Bangladesh encourages people to use environmentally friendly fuels instead of these traditional ones and has been promoting autogas for use in motor vehicles. Also, increasing per capita income makes people of the country interested in using private vehicles, which opened up the growth line for the indifferent horizon.
In 2006, Bangladesh market saw autogas for the first time in a tiny scale and till 2015 there were only 12-15 autogas stations around the country. But if we look into the current market trend, currently more than 200 autogas stations running successfully in Bangladesh and 50 Autogas conversion centres are converting a vehicle from traditional fuel to LPG. To keep pace with the increasing demand of autogas, Bangladesh's government has already approved nine LPG operators to set up 2050 autogas stations in Bangladesh and set "LP Gas Operational Licensing Rules and Regulation, 2017".
The number of autogas conversion is increasing gradually. Every day, about 200-300 vehicles choose autogas conversion instead of Compressed Natural Gas/CNG/NG, which is the favourite fuel in vehicles in Bangladesh. Earlier for the vehicle's fuel conversion, consumers chose CNG as the CNG price was very low in Bangladesh.
It is to be noted that CNG grid line only covers 33 percent of the country whereas 67 percent of the country's fuel network, especially in the northern and southern part of Bangladesh, are still marked by patrols and diesel. This huge gap makes the autogas market more lucrative, and the most vehicles of the northern part in Bangladesh converted their vehicle from traditional fuel to LPG. These days' peoples of Bangladesh pick LPG over CNG due to its safety, less tank's weight and less conversion cost.
According to statistics, around 30,000 vehicles are currently running with autogas and the market volume is about 72,000 MT per year in Bangladesh whereas it was only 6,000 MT per year in 2015. It is obvious that the market is increasing rapidly and the prospects of autogas are very high in the coming years and expected to reach 250,000 MT by 2025.
Apart from all, the Government of Bangladesh is encouraged to use LPG instead of traditional fuels. Leading LPG companies in Bangladesh named Bashundhara LP Gas Limited, Omera LPG, and BM Energy Beximco LPG have decided to invest $150 million in this sector to make autogas popular rapidly. Along with that state-run fuel marketing & distribution companies those supplying traditional vehicle fuels (Petrol, Octane, Diesel) named Padma oil ltd., Meghna oil ltd., Jamuna oil ltd. have already signed an agreement with most of the LPG operators to assist this initiative. These three state-run companies hold more than 1900 fuel stations and work hand to hand with LPG operators to spread autogas all over the country.
As this marketing is growing and operators, as well as the government both, are working together to make a steady market, there are still some challenges. Taking NOCs from various govt. departments, developing safety rules are the biggest challenges of this industry. Besides safety distances, traffic rules (for delivery at day time) in Bangladesh's biggest cities make this industry more critical. As well as cross filling, cylinder refilling and third parties' involvement are also making this market more unstable.
The demand for autogas in Bangladesh market has been increasing continuously since 2017. So, it has a clear upward graph. Market investors project that demand for autogas will expand 7 to 8 times because autogas stations are expanding all over the country, and expect that within the next three years 1,500 autogas stations will be in operation.
Talking about the price, recently, the price of autogas is $0.5/liter worldwide, which is about 50 percent cheaper than other fuels in Bangladesh like Petrol and Octane, which is $1/Liter. LPG investors and experts of Bangladesh assume that prices of autogas may fall with the market growth as transportation cost for the road tanker will become cheaper than recent times with the progress of our infrastructure.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.