Higher duties, transport cost shoot up LPG tariff | 2019-07-14

Higher duties, transport cost shoot up LPG tariff

Banking sector may bear the brunt of it

Special Correspondent

14 July, 2019 12:00 AM printer

Speakers at a roundtable on Saturday said the imposition of Advance Income tax (AIT), Value Added Tax (VAT) and higher freight cost due to poor drafting at Mongla port are responsible for hiking LPG tariff. 

They observed that the tariff for Liquefied Petroleum Gas in Bangladesh is higher than that in other neighbouring countries.  

Most LPG suppliers along with industrial experts attended the roundtable styled “Bangladesh LPG Industry: Present and Future” organized by a leading Bangla newspaper Daily Kalerkanta.

Kalerkanta editor Imdadul Huq Milon moderated the programme while parliamentary standing committee member for power and energy Md Nurul Islam Talukder, BUET Prof Izaj Hossain, President of LPG Association of Bangladesh Azam J Chowdhury, President and Group Country Head of Adani Group Bangladesh Yousuf Shahriar, Country Manager of Indian Oil Corporation Ltd Md Tofazzal Haque, Head of Sales and Marketing of Total Bangladesh Mujibur Rahman, Representative of GGAS Sheikh Naweed Rashid, Chief Operating Officer of LAUGFS Gas Bangladesh Ranjith Jayawardena, CNG Filling Station Owners Association president Masud Khan, Energy Expert Md Mostafizur Rahman, Restaurant Owners Association president Khandaker Ruhul Amin and senior journalists Kalerkanta executive editor Mostafa Kamal, Energy and Power editor Mollah M Amzad and Chairman for Energy Reporters Forum Bangladesh Arun Karmaker attended the roundtable.

Engr. Md Jakaria Jalal, general manager of Bashundhara Group, presented the keynote paper at the discussion. 

Speaking at the event, LPG Association of Bangladesh President Azam J Chowdhury, said LPG supply cost has increased due to imposition of five percent AIT and another five percent of VAT on the import of raw materials.

He said transportation cost also deals a new blow to the hike in supply cost of LPG that pushes the tariff in supply side.

“We are now incurring loss to supply LPG in its existing cost due to duties and transportation barriers,” Azam J Chowdhury claimed.   

He requested the government to conduct dredging at Mongla port aiming to ensure the supply of low-cost LPG.              

He said the demand for LPG has increased to 800,000 metric tonnes now from only 80,000 metric tonnes five years back.

The government’s wholesales approval to the new companies without assessing their financial ability might create vulnerability in LPG sector, he added.

Most new small players didn’t follow the safety standard for marketing the LPG, he said, claiming that no major incidents occurred due to LPG cylinder.

President and Group Country Head of Adani Group Bangladesh Yousuf Shahriar advised the LPG supplier in private sector to procure their bulk LPG with a group so it will help reduce the import cost.                                                                                                                                                                                            

Head of sales and marketing of Total Bangladesh Mujibur Rahman said the country’s US$1.5 billion investment in LPG might face risk if the government fails to adopt appropriate policy.

He apprehends that the vulnerability of LPG industry might also pose a risk to the banking sector.

President of Restaurant Owners Association Khandaker Ruhul Amin said the restaurant owners dare to open their new outlets anywhere due to availability of LPG supply.

He called upon the LPG suppliers to ensure competitive tariff.

Presenting the keynote paper, Jakaria Jalal, general manager of Bashundhara Group, said the state-owned Eastern Refinery Ltd will meet only three percent of total demand whereas 97 percent of the total LPG is imported.

He said it’s easy to detect the leak cylinder by the hissing sound, stench, pressure drop, white fog, and soap water test.

A total of 25 LPG industries are marketing LPG here, and of them, 12 are importers, added Jakaria.

Around 100 AUTOGAS stations are successfully running whereas another 1000 filling stations are proposed for AUTOGAS.

Jakaria said the poor drafting of Mongla port raises the transportation (freight) cost of LPG that pushes the LPG tariff too.

LPG tariff in India and Sri Lanka is comparatively lower compared to that in Bangladesh as the governments of those countries provide smooth transport support. 

The country Manager of Indian Oil Corporation Ltd, Md Tofazzal Haque, said only three state-owned companies including Indian Oil are supplying LPG across India.

“We expect to ensure 100 percent coverage of LPG by the end of 2019 with coordinated efforts to meet the demand for 24 million bottled gas in India,” he said.

He said: “I find great prospect to expand LPG market here through campaigning in rural areas in a coordinated way by 25 companies here.

Representative of GGAS Sheikh Naweed Rashid requested the government to amend the building code that will help expand LPG to new housing projects.

It will also ensure safety and security of the LPG in houses, he opined.             

Bangladesh CNG Filling Station Owners Association president Masud Khan said the conversion of auto-gas in cars might be discouraging if the government fails to ensure the availability of LPG.