'We are trying our best to keep the price reasonable for making LPG a popular fuel'

A leading conglomerate of the country, Orion Group's Orion LPG Ltd is a major provider of LPG in Bangladesh. The Vice President of the company, Anup Sen recently talked about the LPG landscape in the country, the challenges in the sector, and Orion's role in the market, among other subjects. 

Can you give us a brief overview of the state of the LPG industry and the position of your company in the market? 

The Orion LPG Ltd is a concern of Orion Group, which is one of the leading conglomerates in Bangladesh. 

Orion LPG started its operation in 2018 and we have distribution of LPG almost all over Bangladesh. 

At present there are 27 LPG operators who are importing LPG from abroad. Approximately 1.1 lakh tonnes of liquified petroleum gas (LPG) is imported per month. 

The growth of the LPG industry took place from 2016 to 2019 at the rate of 100-120% approximately. After that, the market slowed down but even then some new companies entered the market. 

At present, the market size is actually approximately 13 lakh tonnes per year but capacity has been created for 25 lakh tonnes. As per hypothetical statistics, the market will be 30 lakh tonnes in 2030. The market for LPG will grow rapidly if unauthorised connections are stopped.

What is the policy situation? 

The government organisations have no authentic statistics and that is why they issued 54 licences whereas the market is already saturated. In the LPG industry, gas is carried by steel cylinders and it's considered as an asset of LPG operators, but there is no specific law to protect the steel cylinder from being scrapped. 

There is specific monitoring for the imported accessories such as hose pipe, regulator etc which is used for the connection of cylinders. We are paying a huge amount of money for licence renewal to the Bangladesh Energy Regulatory Commission (BERC), Bangladesh Petroleum Corporation, Bangladesh Standards and Testing Institution, explosive department and other departments but all the costs are not considered in the pricing formula. 

What are the major challenges for the industry right now? 

As per present prescribed pricing formula, the Bangladesh Energy Regulatory Commission (BERC) does not consider many of the costs incurred by the LPG operators, such as inward transportation costs which increased due to diesel price hikes. They considered it Tk65 but the actual cost is now Tk109. In percentages, the diesel price hike led to 68% total cost rise.

We are importing LPG at the dollar exchange rate of Tk110.5, but they are considering Tk100.77 per dollar. Beside this, the actual dollar rate has been affecting us from March 2022. We informed it to the BERC, but they didn't hear our appeal. If we calculate the amount of loss in terms of per tonne, then it comes to Tk7,171 per tonne. 

At present all operators are importing approximately 1.10 lakh tonnes so the total loss can be estimated at Tk79 crore only for the exchange rate. 

Our LPG plant is in the green category and we do business only by filling LPG in cylinders. So, it is not necessary to test SOx & NOx four times a year. We are paying test fees of Tk55,200 annually just for this.

What are the steps you are proposing to keep the price of LPG reasonable for the customer?

We are trying our best to keep the price reasonable for making LPG a popular fuel. But the present price can be reduced by withdrawing VAT and other government fees. 

These include licence renewal fees by the Bangladesh Energy Regulatory Commission (BERC), Bangladesh Petroleum Corporation (BPC) licence renewal fees, fees charged per filling unit by Bangladesh Standards and Testing Institution (BSTI), and fees by the environment department, etc, given that the gas is imported. 

Are you offering solutions for other customers like bulk residential customers with large storage, etc?

Natural gas connections are off now, that's why we are supporting all big residential multipurpose buildings with a reticulation system. 

It saves space, gets uninterrupted gas flow with required pressure and payment of bills by the metering system. We are assisting industrial customers with technical support to run the boiler, burner, small generator, etc. 

How does your brand ensure LPG quality, users' safety?

LPG is a highly explosive material. In order to ensure safety, we are being diligent at every single step: from unloading from ship to the distributor's warehouse, we are ensuring safety in every area. 

Users also need awareness. We arrange training programmes for domestic and industrial customers for safety awareness.