Cooking gas demand drops by 40%
Dealers and retailers in the sector have been hit the hardest as their fixed costs remain the same
The demand for liquefied petroleum gas (LPG), a popular cooking fuel in urban areas, dropped by up to 40 percent within the past one month due to the ongoing countrywide shutdown imposed to combat the spread of the novel coronavirus.
Bashundhara LPG, one of the leading brands with 25 percent of the market share, now has around 40 percent lower demand for its product.
Zakaria Jalal, general manager of Bashundhara LPG, said they would usually sell 20,000 tonnes of LPG in a month. However, in the last one month, the demand dropped to 8,000 tonnes.
"The main reason for this situation is the shutdown of restaurants and other commercial activities," said Zakaria, adding "Consumption in the domestic sector has also dropped as some families moved to their rural hometowns."
Dealers and retailers in the sector have been hit the hardest as their fixed costs remain the same. They are now afraid of a complete collapse of their business if the situation continues for a few more months.
Prior to the Covid-19 outbreak in Bangladesh, the demand for LPG was 2,700 tonnes per day and 80,000 tonnes in a month, according to sources.
But consumption has decreased to 1,500 tonnes in a day as major businesses remain closed. In urban areas, restaurants usually consume around 15-20 percent of the total LPG demand.
Mohammad Arif, a retailer at Karwan Bazar, said earlier, he used to sell 60 to 70 LPG cylinders in a week; that number has now dropped to only five or six.
Like Arif, other LPG cylinder distributors are likely to suffer financially in the upcoming months as shop rent and other maintenance costs still need to be paid.
Besides the dealers and retailers, some new investors in the sector will also suffer from this. Some of them will have trouble repaying bank loans which they had endorsed for investment, said officials at different LPG companies.
"There will be a certain effect on the investors, which is unavoidable. However, it will be better for us if we could find out the best way to cope with the situation intelligently," said Shamsul Haque Ahmed, CEO of Omera LPG.
"We have to find out if there is an opportunity for us in the stimulus package announced by the government," he added.
Currently, 20 percent of the total population in Bangladesh is using LPG gas for cooking, and the total number of users is around 40 lakh. The sector has a capacity of supplying 2 million tonnes of cooking gas annually.
In urban areas, a little more than 46.5 percent of the households have access to either pipelined or bottled gas, whereas only 5.8 percent households have this facility in rural areas.
