LPG refueling: Meghna to add revenue without more investment

The Meghna Petroleum Ltd is expecting a moderate revenue hike from royalty gained from LPG (liquefied petroleum gas) Autogas refueling facilities, as two top companies from the sector have joined the state-owned fuel company.

“We shall be earning a Tk0.50 royalty from each liters of the liquid fuel to be sold at our franchisee refueling stations and Meghna Petroleum will not have to invest a single penny for this arrangement, said Mir Saifullah-Al-Khaled, the managing director (MD) of the company. 

The Meghna Petroleum has informed its shareholders about signing two agreements with BM Energy (BD) Limited and Petromax LPG Limited. 

The agreement will allow these companies to provide Meghna-enlisted refueling stations across the country with technical assistance for establishing and operating LPG refueling facilities, along with LPG conversion workshops. 

“Any Meghna-franchisee gasoline pump can enter such partnership with either of the vendors and the partner company will be providing them LPG supplies at a fixed rate,” explained the MD.

Meghna Petroleum has more than 840 gasoline stations all over the country and the company is expecting at least 200 of them to add LPG refueling facilities in coming years.

“Current market assessment, based on latent demand indicates around 500 LPG Autogas stations would be enough to cater to the Bangladeshi market and as 39 percent market occupier in gasoline sector the target for LPG is fair,” he added.

“Potential revenue impact from LPG refueling royalty will not be too high but also not totally ignorable. A station is supposed to give us revenue of 60 thousand taka per month on average and the two agreements signed this week has the potential to add Tk15-20 crore to our revenue,” Mir Saifullah told the Business Standard.

Can LPG surpass Gasoline as automobile fuel in future?

Both gasoline and LPG is liquid auto fuel, but LPG is cleaner and cheaper. A vehicle needs only an additional fuel kit to run LPG. 

“There is a high potential for autogas. But I am not sure what exactly is going to be the market scenario. Whatever happens, that will not impact Meghna Petroleum’s topline as the company has presence in both markets,” the MD said.