Interview With Bashundhara LP Gas: Pioneers Of Lpg In Bangladesh
Engr. Md. Jakaria Jalal
General Manager (Strategy Planning And Expansion)
BASHUNDHARA LP GAS LIMITED
1. Tell us about Bashundhara LP Gas Limited’s presence in Bangladesh and its plans for the future.
Bashundhara LP Gas Limited (BLPGL) is one of the pioneers of the LPG industry in Bangladesh since 1999 with the highest storage capacity in the country. To maintain this steadiness, BLPGL has one of its mother plants situated at Mongla and since 2013-14, when this business started to ride on exponential growth and lots of investors hit the market, BLPGL reinvested in the LPG industry and established another mother plant near Dhaka city. BLPGL is the only company in Bangladesh which has a mother plant near Dhaka which is a new milestone in the LPG industry in Bangladesh.
The Dhaka plant has all the latest facilities for cylinder re-filling through State-of-the-art technology called ‘flex-speed’ which can fill around 3500 cylinders per hour, which is the second largest of its kind in South East Asia.
BLPGL also has 2 satellite plants for continuous support which are located in Bogura & Chittagong. Along with that, Bashundhara has two- modern cylinder manufacturing plants adjacent to the mother plants in Sundarban Industrial Complex Limited, which holds the biggest cylinder manufacturing capacity, not only in Bangladesh but also, the world.
Setting up the largest Cylinder manufacturing plant in the country and building the biggest cylinder refilling unit, along with the largest LPG logistics capacity as: LPG New Terminals with Maximum Land based LPG storage and satellite stations, cylinder carrying trucks, road tankers and LPG vessels has made BLPGL second to none in this competitive industry.
BLPGL are also planning to set up another mother plant and 2 more satellite plants in Sylhet & Barisal. Last but not least, the customer is constantly a top priority for any situation and their satisfaction is BLPGLs’ ultimate desired goal.
2. What is the typical monthly refilling capacity at an LPG refilling plant in Bangladesh? How do used LPG cylinders get back to the refilling plant? Does Bangladesh have a cylinder exchange program?
Taking into account, all the LPG companies in Bangladesh, each month there is approximately 7 million cylinders refilling capacity with another 5 million to be added soon. Where cylinder return is concerned, company nominated distributors always maintain a chart of retailers and end users for the proper management of the cylinders and BLPGL is also looking forward to have the latest IOT solution system for maintaing all the information of all our cylinders and we are already working on it to improve the system to track it. Currently, Bangladesh does not have any cylinder exchange policy.
3. Is existing refilling infrastructure sufficient for current LPG demand in Bangladesh? How can this be developed?
Due to dwindling reserves of natural gas, local industries are gradually shifting towards LPG for an uninterrupted gas supply. LPG also enables expansion of industries in the areas where there is no access or poor access to natural gas. We are seeing rapid growth in LPG demand. Use of LPG has transformed from being a choice to a need for Bangladesh, and considering the running & upcoming demand, the existing refilling infrastructure it is not sufficient.
Managing the cylinder supply chain is quite heavy (in weight and price) but it is the key to strengthen any LPG company to run business smoothly. Another significant aspect of an LPG business’ success in Bangladesh is the logistics capacity which also requires significant investment.
Another one of the biggest challenges that remains for LPG companies is in the distribution channel which is severly lacking awareness of ‘good faith’ in business among distributors and companies is lack of a safety culture by the distributor and retailer. This presents itself as an obstacle to grow the business in a sustainable manner.
Malpractices from ill-minded businessman and traditional bureaucratic delays from different government bodies to get approval or even the involvement of different government bodies to control the LPG business, is putting the industry in a tough position to continue operating smoothly.
Yet, LPG operators still require so many certificates from various government departments.
The licensing policies of the government departments should be made more clear and brought under one umbrella as a one-stop solution center for LPG licensing. This will help the LPG industry become more compliant and efficient.
One of the most important issues that is still unresolved for the Bangladesh LPG industry to grow is: all investors have built up their capacity in Mongla where they cannot bring big vessels, hence two big problems have arised; the first being – price of LPG will always be high as the number small pressurized vessels around the world is limited, so the time chartering cost in the end, becomes a premium cost taken by the trader going up. Secondly – the volume that we are targeting for next 7/8 years will be tough to manage with only 2-3K MT vessel to supply that can enter the port. The Government should make plans to dredge the channel to allow larger vessels to enter as a part of accumulated demand of investors. This is the greatest concern for the industry as we can foresee at this moment.
Cavagna Group Asia: Creating A Sustainable LPG Presence In Bangladesh
AZN CORPORATION, BANGLADESH
Bangladesh a small south East Asian nation has all of a sudden become the talk of the town of the LPG Industry. Although mentioned as a small nation, Bangladesh is ranked as the 8th largest country in the world in terms of population and considered as the most densely populated country in the world with almost 170 million people.
Over the last two years, usage of LPG has seen a 400% growth in Bangladesh. At the moment, LPG consumption is less than one million tons per annum, but it is projected to cross 2 million metric tons by 2025. Bangladesh is a fast-developing country with steady GDP growth of 6% a year for the last ten years but has a huge energy crisis where LPG is considered to be only possible quick alternative to its main energy source of natural gas.
Cavagna Group Asia (CGA) along with its long-term partner in Bangladesh – AZN Corporation, made the timely decision of opening up a local liaison office in the Bangladeshi capital city of Dhaka, along with a warehouse facility in the country’s port city of Chittagong. CGA – AZN expects substantial opportunities in the Bangladesh LPG market to grow through its many long-term partnerships.
The rapid and sudden growth of LPG usage has also caused a substantial vacuum of quality LPG related products and its service providers. Cavagna Groups’ direct presence to some large investors, is a big relief.
Mr. Naweed Rashid
Mr. Naweed Rashid of GGas – Energypac Power Generation Limited looks to promote quality and sustainable products and services to the industry.
GGas has been an exclusive Cavagna Valve user for their cylinders. Mr. Naweed perceives providing sustainable solutions as a responsibility of all the stakeholders – just like a chair is stable only when all legs are in right place, similarly Government, suppliers, buyers and all should come forward and ensure the sustainability without a compromise to quality.
CGA – GGAS with the help of its local office has taken up numerous other collaborations in introducing innovative products and services to the market. GGas which is considered to be one of the fastest growing LPG companies in the country, has over 1.5 million domestic cylinders in the market.
Opportunities are emerging for commercial usage of LPG in the industries with each passing day. Key players in the industry are heavily investing in domestic storage and logistics, which will lead to easy access of LPG in remote corners of the country for bulk use.
Petromax Director Nafis Kamal says “ Bangladesh is on its very early stages of the learning curve for LPG industry, at this time having Cavanga in Bangladesh is a great support, as from the very beginning the stake holders will get the support of the 70 years of experience of Cavagna in gas control systems. Petromax is one of the largest investors in the sector, having their own gas bottling and cylinder-manufacturing units. At the moment, they have more than half a million cylinders in the field – reaching the number in just 6 months of operation.
Slowly but surely Cavagnas’ presence in Bangladesh is a win-win for both Cavagna and the industry. By nature, Bangladeshi people favour internationally recognized products and brands. The government authorities are also very strict about the standards. For example, cylinder importers are bound to import DOT, EN or equivalent, similarly for valves UL, EN or equivalent standards are allowed – which boldly states the promising future of the industry.
Public Private Partnerships: Expanding The LPG Industry In Bangladesh
Engr. Anwar H. Khan
Energy & Management Consultant
Observations of the LPG Industry
Bangladesh is a developing country that is rapidly moving towards becoming a middle-income country. The Energy sector is of very high importance to the country given that indigenous natural gas constitutes about 90% of the sources of fuel supply for power generation, fertilizer production and other major industrial uses including household cooking.
However, due to shortage of natural gas reserves in the country, the government has already decided to replace natural gas with Liquefied Petroleum Gas (LPG) and stopped the supply of pipeline natural gas for cooking all across the country. Hence, it has become necessary to develop infrastructure in the local LPG industry to ensure an uninterrupted supply of LPG for cooking fuel, auto gas fuel and other commercial uses.
Gazettes relating to LPG policies in the country have been published by the Government for importation, processing/bottling, marketing and distribution for diversified uses with the aim of encouraging the private sector to join others in the LPG industry and help in creating a market so that products with a reasonable price and extraordinary quality can easily be provided to customers who seek to use LPG.
The Bangladeshi government has been actively supporting, as well as promoting the use of LPG in the country. The reason for this is that the country has had to depend on natural gas for far too long for all its energy requirements and can no longer sustainably do so. The most significant increase has been in power generation where the bulk of supply is from natural gas and thus, utilization of natural gas has grown tremendously.
At this situation of primary energy dearth, many alternatives of energy i. e. LNG, LPG and coal have been widely discussed as replacements and among them, LPG seems to be the most suitable alternative as it has already been used in Bangladesh for some time. As such, the government has decided to import LPG for domestic use and transport, shifting from natural gas to LPG, including in small industries, where the required gas pressure for natural gas is not available.
At present, LPG is replacing conventional diesel and octane as it provides improved combustion and clean burning. LPG also has a wide variety of uses. Other than in households, it is used as an efficient fuel in various sectors like agriculture, healthcare, construction, maritime and fishing. LPG containers have been made available in Bangladesh for sale since the 1980s by state-owned BPC (Bangladesh Petroleum Corporation).
With growing demand, the government has, in the mid-90s, allowed the private sector to import and sell LPG in the local market. The state-owned LPG producers i.e. Rupantarita Prakritik Gas Company Limited (RPGCL), under Petrobangla, extracting LPG from natural gas and LP Gas Limited (LPGL) under BPC extracting LPG from crude oil, supply 20% of LPG of the total market demand, while private players supply the remaining 80 per cent by importing bulk LPG from foreign refineries or traders.
Replacing natural gas with LPG is a challenging task but it is being done gradually here. Apart from the urban market, there is a huge untapped market for LPG in villages where pipe-line gas will never be (or at least not for many years into the future) made available and this market is only growing each day.
Recently, the LPG Association of Bangladesh was formed by local operators and has been working closely with the government, particularly the Energy Ministry, Petrobangla and Bangladesh Petroleum Corporation, to formulate proper rules, regulations, and policies so that the industry can be regulated properly.
As natural gas is seriously being discouraged in the transport sector, use of LPG is becoming popular globally. In the filling stations of the developing countries, LPG is known as Auto Gas.
Auto Gas is also popular as ‘green’ automotive fuel around the world. Not only it is good for vehicle engines, but it is also good for the environment as it is free of lead and contains very low sulfur and other heavy metals.
Private enterprises now have a good business opportunity to setup more LPG plants to help the country meet the rising demand of LPG. They are now able to benefit immensely from this surge in demand. Private enterprises are currently in the process of constructing 23 LPG terminals and 43 bottling plants along with 200 LPG Auto Gas stations in near future.
Apart from the above initiatives taken by private operators, in 2011, Bangladesh Petroleum Corporation (BPC) took up the project “Construction of LPG Import, Storage & Bottling Plant at Kumira in Chittagong including Import Facilities of LPG, Jetty, Pipelines and Storage Tanks under PPP”, with a production capacity of 100,000 MT per year to be installed on 10 acres of land. Incidentally, the original deadline of June 2013 could not be met and later the deadline was extended to June 2016. This project has still not yet been able to see the light of the day.
Besides the above, other efforts have also been taken by BPC to address the shortage of cooking fuel for household use as well as transport fuel to replace CNG through-
- Setting up the country’s largest ever LPG plant jointly with Indian Oil Corporation Limited (IOCL) in Chittagong.
- Setting up an LPG bottling Plant including import facilities, storage tanks and pipelines at Mongla, Bagerhat on JV undertaking.
- Construction of an LPG Cylinder Manufacturing Plant with an annual capacity of 240,000 cylinders at Elenga in Tangail through a Joint Venture (JV).
- Setting up a bottling plant and cylinder manufacturing unit with Chinese investors under PPP.
However, the status of these efforts seem to be uncertain.
An International joint venture company, namely Karnaphuly Fertilizer Company Limited (KAFCO), took an initiative to mitigate a certain portion of the energy crisis of the country and invited EOI in April 2017 for the installation of a 100,000 MT per year capacity LPG Terminal which included associated facilities under a JV with a proven and experienced LPG operator. This initiative is currently in the works.
In addition to above initiatives, it has also been noted that in 2016, Rural Power Company Limited (RPCL), an Enterprise of Bangladesh Rural Electrification Board (BREB) conceived an idea for setting up a 350 MW LPG Fired Power Plant at Gazaria beside Meghna River under Munshiganj District. However, this initiative still has no progress.
It should be mentioned here that Rupantarita Prakritik Gas Company Limited (RPGCL), under Petrobangla, produces LPG by processing NGL in its fractionation plants at Kailashtila, with natural gas available from Sylhet Gas fields Ltd. (SGFL), another company under Petrobangla and used to distribute its LPG through the marketing companies under BPC.
The LPG industry in Bangladesh is currently undergoing a phase of rapid growth and it is expected that current demand of 600,000 MT will be increased to 1.4 million MT by 2022.
Very recently i.e in October 2018, it is has been made known that IFC, a member of the World Bank Group, has invested $20 million as a long-term loan in Omera Petroleum, a subsidiary of MJL Bangladesh Limited. This is a long-term partnership, which is believed to double Omera’s capacity to 350,000 additional households, which represents around 12% of total LPG market potential of the country.
The Government of Bangladesh has announced its plans to shift supply of natural gas away from residential consumptions to power generation and various other industrial uses. The Government also sees LPG as the best solution for new townships that are not connected to the gas grid. As such, reliable sources of LPG are needed to achieve the above mentioned targets mapped out by the government through constructing new terminals, bottling plants, auto-gas stations and other associated support services. To ensure safety and high standards of operations, these initiatives should also be taken to move the LPG industry in Bangladesh to match the high safety standards of developed countries such as those in Europe.
Taking the opportunity of my long association with the energy sector and prevailing energy situation along with present position of LPG industry of the country, it is my opinion that expansion of LPG use will provide easy access to the customers across urban centers as well as remote areas of the country.
As such, for the establishment of economically feasible and a low cost cooking fuel supply chain all over the country through the importation of LPG to replace pipeline natural gas, kerosene and fuel woods, it is suggested that, especially for the public sector, they should adopt a Public Private Partnership i.e PPP modality for the rapid development of LPG industry of the country, side by side with private operators.
Role of PPP in LPG Expansion
We are aware that the primary objective of Public Private Partnership (PPP) is to bring together the financial experience and skills of public (state) and private entities into a single commercial enterprise to provide infrastructure/services to meet essential needs. In this case, PPP modality will be applied for sustainable and cost-effective LPG supplies as substitute for natural gas, kerosene oil and other traditionally used fuels, with a focus on being used for cooking purposes and other uses as mentioned above, in the country.
LPG supply and distribution are complex activities as the product itself is highly volatile and hazardous and any enterprise choosing to enter this business must have ready access to the following skill sets:
- LPG cargo supply and trading in the international commercial and operational markets.
- LPG terminal management and operations experience, including specialist knowledge in international standards of LPG handling in terms of efficiency, safety, health and protection of the environment.
- LPG marketing, distribution and effective communication to the public with regards to safe storage and usage.
The main parties contributing to the creation and operation of a successful LPG supply and marketing business under PPP, are:
- Government – national, regional, municipal, etc.
- Private Sector Financial Investors – national and international (including Government).
- Private Sector Business Enterprise investors (industry players) – national and international (presently involved in the LPG supply and marketing business).
In view of the above ‘observations and suggestions’, it may be concluded that for sustainable and cost-effective LPG supplies, the Bangladesh Government may come up with revivifying the earlier PPP Project Development Initiatives along with new initiatives to find partnership with the private sector under a PPP modality.
This partnership could be made through a suitable and feasible Joint-Venture opportunity with bona-fide, renowned and competent organizations (national and/or international) for establishing a complete LPG Business Package – which should include (i) buying bulk LPG from foreign refineries or traders – (ii) shipping bulk LPG to its terminal (to be build) in Bangladesh via seagoing gas carriers – (iii) storing bulk LPG into sphere or bullet tankers via jetty pipelines – and (iv) bottling for distribution to the market.
The conclusions made above are only for information and reference purposes for all concerned, but for adoption, it is advised to consult with a qualified professionals and or the relevant authorities to obtain the advice required for undertaking PPP projects for expansion of LPG usage throughout the country.
WLPGA Good Industry Practice Workshop, Colombo, Sri Lanka (13th – 14th November 2018) Report
The newly formed LPG Association in Sri Lanka hosted a good industry practice workshop in November organised by the WLPGA and their two members in the country, Litro Gas and Laugfs Gas.
Over 110 delegates attended including several representatives from government. WLPGA Director David Tyler was supported by David Appleton, Argus Media, and Vic Marinas, WLPGA consultant over the two days.
Topics on day one included an overview of the global and regional LPG industry including some forecasts for the supply and demand over the next 10 years, and an explanation of the main physical properties and characteristics of LPG and how they impact on the safe storage, handling, distribution and use. Emerging markets including LPG to power and marine were also discussed.
Day two focused on operational issues such as bulk storage and reticulation, terminal and filling plant operations and HSE management.
Delegates analysed two case studies which were relevant to the safe development of the LPG industry in Sri Lanka. These focused on the proposition for LPG against competing fuels and the impact various stakeholders have on incidents.
Each delegate was presented with a certificate of attendance by David Tyler at the end of the workshop. Participants were very enthusiastic about the workshop and suggested it should be made an annual event.
Delegates were given a memory stick containing the whole suite of Good Industry Practice Guides produced by the WLPGA to date together with all the presentations.
2018 Gas New Zealand Forum, Wellington (7th – 8th November 2018) Report
WLPGA Director presented at the New Zealand Annual Forum which was held in Wellington in November. His topic ‘LPG in a Sustainable World’ was a timely response to the government’s recent decision to ban all future off shore oil and gas development as the country moves towards a zero-carbon future.
LPG has a role to play within this energy policy even though it is a fossil fuel. The opportunity to displace higher carbon fuels with LPG presents a compelling argument when the country continues to burn coal for some of its electricity generation.
David described some of the initiatives currently being undertaken by the WLPGA that position LPG in a low carbon world. These included the impact of the Internet of Things (IoT) of making the industry work smarter; the opportunities for LPG to power (displacing diesel and fuel oil) and the initiatives being taken by large power generation companies such as Wartsila, GE, Siemens and MAN to produce the hardware to burn LPG; the continued efforts to transition 3bn people from traditional fuels to LPG including the partnership between the WLPGA and the UNHCR resulting in the UNHCR joining the WLPGA as an observer and the exciting development of shipowners using LPG as a marine bunker fuel in response to the IMO’s announcement of moving to a 0.5% sulphur fuel by 1st January 2020.
A panel discussion concluded that despite the governments directive of a zero carbon future there was plenty for the gas industry to be excited about when looking at 2030 and beyond.
Gas India 2018, Hotel, Pune, India (14-15 December)
Mr R T Kulkarni
Gas News India
Keeping a close eye on gas as a major energy source that plays a huge role in India’s Energy mix, Gas India has identified the importance of keeping the industry inter-connected and up-to-date with all that goes on across the industry, through its annual conference and exhibition in Pune next month.
Gas India 2018 continues to pick up momentum, and we now have 7 confirmed speakers who will be presenting on topics that include developing a gas-based economy, using gaseous bio-fuels, BOT systems, LPG bottling plants, micro LNG perspectives, the future of 450 kg cylinders in India, and conversion from other fuels to gas.
Six more speakers will confirm shortly in line with the theme of Conference, ‘Energy Innovation-Equipment & Instruments’. We also have a total of 6 stalls and 5 tablespaces, out of which 3 stalls have already been booked. The stall registrations are going on, and we are also accepting technical papers for presentation.
Senior representatives from companies like AEGIS Logistics, Globe Gas Equipments Industry, Primove Engineering, and Pune Gasparts would be participating in this event. The event is supported by Indian Bio Gas Association and LPG summit.
We are also accepting sponsorships, along with advertisements in the technical volume. The event will take place in The Pride Hotel,Pune,India on 14-15 December 2018.