Among the developing countries, the economy of Bangladesh is growing at a rapid pace with a growth rate of 7.2%. LPG tank manufacturers are in demand to push the LPG demand in the country.The demand for LPG has increased at an exponential rate of 60%. The reason for this sudden rise is the suspension of natural gas connections in the country. But along with opportunities there are numerous challenges for the LPG market in Bangladesh.
Challenges in the LPG market in Bangladesh:
At the moment, Bangladesh has a LPG supply capacity of 4,00,00 MT/year which is way less than its enormous demand of 1.5 million MT/year. In the next five years, experts estimate a 400% growth in the LPG sector in Bangladesh. Although there are government initiatives to support the LPG industry, the biggest challenge to the LPG market is that the supply cannot keep pace with the demand in the industry. It will take time for investors in the LPG space to set up the infrastructure and reach out to all the areas where there is demand. A plan for LPG tank installation, LPG filling stations installation,LPG bottling plant, LPG service lines and other details to transition from CNG to LPG is necessary for carefully tackling the challenges faced by the LPG market in Bangladesh.
Opportunities in the LPG market in Bangladesh:
Initially, the Bangladesh government served its people with CNG which also included import of fuel to meet the demand in the country. But now natural gas has become scarce and costly. It will be completely depleted by 2022-2023 if new gas supply capacity isn’t added to meet the increasing demand for fuel. In the recent years, in view of the growing energy concerns, the regulatory authorities of Bangladesh took decisions to promote LPG consumption in the country.
According to an industry report, the energy division of Bangladesh estimates a gas demand of 8,000 MMCFD by 2041. Hotels and restaurants are one of the major energy usage sectors in Bangladesh. CNG will not be available for long for this sector as well as other commercial use sectors such as agriculture, lighting, metal and more. LPG will be the ideal clean alternative for catering to energy demand for commercial applications.
Some of reasons that have led to opportunities in the LPG sector are as follows:
- Rise of entrepreneurs in the country
Economic growth, higher literacy levels and women empowerment has led to more and more entrepreneurs in Bangladesh.
- Wealthy population with increase in the income
As per statistics, the per capita income of Bangladesh is expected to increase to US$ 1,752. The growing income is turning Bangladesh in to a middle-income country. LPG will become affordable for the financially secure citizens of the country.
- Increasing use of LPG as an auto fuel
In Bangladesh, more than 1,000 auto gas station licenses have already been awarded by the government to promote the use of auto fuel. The target is to convert 2,50,000 vehicles into vehicles running on auto gas.
- Tax benefits
The Bangladesh government provides tax exemption on import of LPG. Also, LPG equipment can be imported to Bangladesh at 2% less tax than the normal tax rates.
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