The government has eased restrictions on setting up liquefied petroleum gas (LPG) bottling plants and running LPG businesses by private sector to meet the growing demand for the item in the country, a top official said Friday.
The energy ministry decided to ease the restrictions in a meeting held recently.
"It will help encourage the use of LPG in households in absence of piped gas, and also reduce its price in local market," the Bangladesh Petroleum Corporation (BPC) Chairman Md Muktadir Ali told the FE.
He said as per the government decision the aspirant private entrepreneurs will not have to wait long for obtaining licences from different state-owned entities, including the BPC.
The energy ministry is now preparing a policy to help avoid the previous restrictions in setting up LPG bottling plants in the country.
As per the government decision, private firms will have 18 months to set up LPG bottling plant after receiving permission, he said.
The companies will also have to submit progress report on installation of LPG plants within the first three months after attaining the government nod. If the companies fail to fulfil the criteria, then their license would be cancelled.
The new LPG plants will be run initially on imported gas. But they will be able to use local gas, if the country explores sufficient gas, said the official.
The market players have appreciated the government move of easing restrictions on setting up LPG bottling plants.
"It will help flourish the sector and bring down LPG prices in the country," managing director of Jamuna Spacetech Joint Venture Ltd Belayet Hossain told the FE.
The LPG firms that had launched business earlier had to struggle hard initially due to various restrictions and complexities in policies, he added.
The BPC chairman said the corporation is now working to construct an LPG bottling plant at Kumira in Chittagong with a yearly capacity of 100,000 tonnes to popularise LPG use and ensure its availability. Fifteen firms expressed interest to build the LPG plant for the BPC, following an international tender in July.
"We are now evaluating their offers for selecting the most competitive firm," he added.
The country now consumes around 100,000 tonnes of LPG each year, mostly by the urban people in district towns and light-engineering workshops where piped natural gas connection is not available.
According to official statistics of energy ministry, LPG demand in the country is 300,000 tonnes per year. However, the BPC chairman said the demand will be over 500,000 tonnes per year.
LPG demand is increasing sharply with the government's decision of not providing fresh piped gas connections to households since July 2010. Besides, firewood accessibility is gradually shrinking and the price of kerosene is going up, resulting rise in LPG demand.
Officials said a favourable policy along with availability will popularise use of LPG across the country.
The government has already cut import duty on LPG, LPG cylinder and other accessories to reduce LPG price in domestic market and encourage its use.
It has already 'zeroed' the tariff on LPG import from the current fiscal year (FY), 2011-12. Import duty on raw materials of LPG cylinder has also been reduced.
The state-owned LPG producers now supply 20 per cent of the total market demand of LPG, while private players import the remaining 80 per cent.
The BPC pioneered LPG marketing in Bangladesh in the late 1970s. With the increasing demand in the mid-1990s the government allowed LPG import and permitted private entrepreneurs to invest in LPG storage and bottling.
Anticipating a huge demand of the fuel in the country, several multinational and leading local companies came forward and made investment in LPG import, storage and bottling during 1999 and 2001.
LPG powered Air Conditioning System World's First
Oceanair Distribution has teamed with Calor Gas to rollout the world's first lpg-powered heat pump VRF air conditioning. The technology operates on the same principle as lpg-powered vehicles and opens up new application areas for air conditioning.
The system also provides hot water and generates its own electricity - which can be used in buildings for lighting and other services.
Bob Cowlard, managing director of Oceanair Distribution, said: "It's a hugely exciting development. Many buildings requiring air conditioning are maxed out on electrical power and don't have adequate mains gas supply.
The new lpg-powered Sanyo system opens up a big and important new market for air conditioning. It is a major step forward - in terms of both technology and market opportunity."
Limited power situations can arise in country hotels, club-houses on golf courses, leisure centres in rural settings, military bases and temporary facilities catering for sporting events or corporate entertainment. However, a surprising proportion of inner-city areas also suffer from lack of three-phase power and inadequacies in mains gas supply.
Some 40 per cent of commercial buildings are believed to suffer upper-limit electrical supply problems, and offices, shops and restaurants are potential applications for an lpg-powered solution. Upgrading a power supply to three-phase is expensive and disruptive - and is often not an attractive option for building owners. The new approach uses lpg as a fuel to power a Sanyo gas-driven heat pump VRF air conditioning system.
A modified 2-litre Nissan engine, operating at between 800-2100 rpm, is equipped with conventional engine components, such as spark plugs, oil and air filter, as on a standard car. The system only requires connection to a single-phase power supply to power start-up, a control circuit and inverter-driven fans.
The technology is highly efficient, ranging from between 1.4 (140 per cent) to 1.6 (160 per cent) when used as a heating or cooling system respectively. The technology is being promoted as an alternative to oil-fired heating systems, against which it offers immediate cost savings.
Due to the efficiency of the system, which delivers both hot water and up to 4kW electricity, Enhanced Capital Allowances are available covering both equipment and installation.
Bob said: "Lpg-powered air conditioning opens up a new frontier for the industry. Not only does it work, it delivers superbly in terms of efficiency and performance. It opens the door for a whole new generation of air conditioning installations around the country."
Picture: Sanyo heat pump VRF air conditioning system powered by lpg.
Rush to set up LPG plants
Surging demand for liquefied petroleum gas (LPG) from the fast-expanding housing sector is forcing entrepreneurs to quickly install plants and grab a share of the growing market.
About a dozen companies are in line to join the existing six, which include two state-owned firms. But some 30 companies have applied to the government, seeking permission to install LPG plants, according to the energy and mineral resources ministry.
Business groups such as Orion and MJL Bangladesh are to hit the market soon while Navana, Amin Mohammad and Sanwara are also in the pipeline. Partex Group plans to come into the business too. Most plants are being set up in Mongla Port areas.
"Many private companies are coming up to grab a share of the growing domestic market. Gradually, LPG may be used commercially in Bangladesh," said Salman Karim, managing director of Orion Group, the parent company of Orion Gas.
The Tk 150-crore Orion Gas is likely to start commercial production next year.
LPG, which is considered a safe, eco-friendly and healthy cooking fuel, is derived from both crude oil and natural gas. Along with domestic use, LPG is also used as an efficient source of energy in various industrial and commercial applications. But it costs several times more than natural gas and 20 percent more than kerosene.
The concept of LPG is relatively new in Bangladesh, arising after it was believed that there was not enough natural gas both for household and industrial consumption. At present, many companies are affected by the gas crisis and new ventures are not getting gas connections. As a result, many are incurring huge losses and bearing the burden of bank interests.
Different estimates show demand for LPG is 500,000 to 600,000 tonnes a year against a supply of only about 75,000 tonnes. The supply is backed by imports of 50,000 tonnes.
The huge demand and supply shortfall often leads to a dramatic rise in prices of the product at local markets, according to industry players. A 12 kilogram cylinder costs nearly Tk 1,500 at the retail level.
"A cut in VAT and duty reduction for imports have encouraged investors to come into the business," said Muhammad Sofir Uddin, head of operations of Orion Gas.
Importers can now easily import gas from Abu Dhabi, Singapore, Malaysia and Indonesia, he added.
"Hundreds of flats in different cities remain unsold or the buyers cannot reside in the flats due to the non-availability of gas connections," he said.
Fazlur Rahman, who is in charge of LP Gas Ltd, a subsidiary of state-owned Bangladesh Petroleum Corporation, said more companies in the private sector can help reduce the price of LPG at the consumer level.
"The present business model dominated by a few will be hit hard if more companies come into the business," said Rahman, citing an example where they sell a 12.5 kilogram cylinder to dealers at Tk 631 only, which is sold at more than Tk 1,200 at the user-level.
A senior official of Premier LP Gas Ltd that markets the brand TOTALGAZ also said the high price deters the growth potential of the market.
Kosan Crisplant Partners with Orion Group for Set up An Interesting LPG Bottling Plant at Mongla.
The Government of Bangladesh is encouraging the private sector to invest in the LPG (Liquefied Petroleum Gas) sector in Bangladesh.
One of the factors among others to support this initiative is the introduction of zero duties on import of equipment and accessories for the LPG sector.
The aim is to increase the use of LPG in Bangladesh substantially .
One of the first private sector companies to embrace this new challenge is ORION GROUP.
ORION GROUP is a diversified company with investments in a number of business areas.
On 8 August 2011 a contract was signed between ORION GROUP, Dhaka, Bangladesh and Kosan Crisplant a/s, Aarhus, Denmark.
The first stage of the contract is the building of a combined LPG Terminal and Filling Plant in Mongla Industrial Area, Mongla.
The terminal is initially designed to handle 30.000 MTPA.
Storage capacity is 3.000 metric tonnes of LPG - with a possibility to expand.
The plant will be designed and built in accordance with the standards of Bangladesh as well as the latest international standards.
The terminal will among others include:
- Jetty to receive LPG by ship
- Spheres for storage of LPG
- Tank truck terminal for handling LPG in bulk
- LPG filling hall
- Maintenance hall
- Safety installation - firewater, fire & gas alarm systems, lightning protection etc.
- Technical installations - electrical power supply, compressed air, earthing etc.
- Facilities for personnel
- Main Office
Kosan Crisplant is very proud of having been selected by ORION GROUP to become a partner in the realisation of this important LPG project.
Kosan Crisplant (KC) is a company specialized in all aspects of the LPG business.
For 60 years, KC has designed and produced equipment for filling, checking and maintenance of LPG cylinders.
Beside being a core LPG filling equipment producer, KC also undertakes supply of turnkey plants for handling all disciplines related to the storage and distribution of LPG in bulk or in cylinders.
When a plant has been handed over, we offer the customer our services in the form of Facility Services and Facility Management.
KOSAN CRISPLANT PARTNERS WITH GRUPPO TECNOGAS.
Kosan Crisplant Group in Denmark has made an agreement with Gruppo Tecnogas of Italy to become the first point of contact for Tecnogas' equipment and accessories, with the right to use Kosan Crisplant's own brand name jointly with Tecnogas' brand.
The agreement covers sales and marketing in selected markets, chiefly in Africa, the Middle East, and Eastern and Iberian Europe. Tecnogas will also be Kosan Crisplant's first choice for complementary products.
Bo Larsen, sales director at Kosan Crisplant, said: "Kosan Crisplant supplies flexible plants and systems for filling and maintenance of lp gas cylinders, and offers after sales service and facility management. Tecnogas specialises in quality bobtails, semi-trailers, lp gas compressors, lpg autogas stations and other equipment and components related to the lpg gas business. Both companies' products complement each other and create a strong combined selection of equipment, accessories and services to the lp gas filling market."
Contact Kosan Crisplant on +45 87 403000 www.kosancrisplant.com
KOSAN CRISPLANT REFINING ITS FLEXSPEED TECHNOLOGY
BY KAJ LEHMKUHL, KOSAN CRISPLANT
Kosan Crisplant aims to push the limits of what an lpg equipment and system provider can and should do for its customers.
Bottled lpg gas should be made available to users everywhere, irrespective of means and resources, and corporate social responsibility means bringing bottled lp gas to the needy in developing countries, for example.
Governments, international organisations and investors are working closely to establish not only lp gas filling facilities, but also increased safety at plants, depots and households and better utilisation of lpg, creating jobs related to the filling, handling and distribution of lpg gas cylinders, and setting up lpg cylinder distribution networks. The technology to provide for these efforts is here, and is continuously being refined.
Kosan Crisplant recently designed a system for high capacity lp gas filling plants using new thinking and technology to obtain better safety and accuracy and higher capacity, leading to a lower cost per filled unit for plant owners. The design incorporates not only the core lp gas cylinder filling process, but also the adjacent processing units and supporting lpg cylinder handling and conveyance functions, as well as the control system.
Fast systems offer a high throughput and the ability to run at different speeds but often at the expense of other features, whereas slower systems naturally have a limited speed range. Only one system gives the best of both worlds and more - flexible speeds varying from the standard processing capability of conventional equipment to high-speed, lean operation, breaking all known limits for system versatility, including reliable high capacity processing. This flexibility optimises day-to-day production planning at lpg gas filling plants with consideration for varying peak periods, and offers better system and machinery performance.
Flexspeed is continuously being refined and brings the future of lp gas cylinder filling into contemporary plants, servicing all capacities at a reasonable investment.
The standard Flexspeed system configuration includes a multiple post filling carousel, a setup that can operate with any number of filling units on just one carousel rail. The capacity for the system ranges from 1,200 lpg gas cylinders per hour, the average capacity of conventional filling equipment, up to a record-breaking 4,000 lpg cylinders per hour, changing only the number of filling units.
Product upgrades, such as infrared leak detection, automatic camera reading of tare values and grouping all the system controls in the latest version of the Crisplant Universal Controller (CUC) interface unit, are finding their way into existing systems as cost-effective improvements. Fully automatic operation eliminates the human factor in crucial stages of lpg cylinder filling and handling at both large high-tech facilities and small filling sites.
Product advances and refinements include improvement of conventional equipment at no additional cost. This leads to higher benefits for fillers and easier access to useful equipment upgrades. This comes in handy for lp gas filling sites operating on limited budgets, where advanced processing equipment is within financial reach.
Most of these benefits can be adapted for installations in rural areas, and areas where Kosan Crisplant actively works to minimise deforestation by making provision for the use of bottled lp gas instead of charcoal.
Contact Kosan Crisplant on www.kosancrisplant.com
No New Gas Connections to the Households
The government would not give new gas connections to the households to maximise the potential use of gas amid severe crisis. Liquid petroleum gas will be promoted as alternative for cooking fuel.
The announcement came from the energy secretary Mohammad Mesbah Uddin while answering to the questions of journalists in a press conference on Petrobangla's achievements and roadmap held at Petrocentre on Tuesday.
‘Principally we want to reduce the gas supply through pipeline. People will use LPG for their', Mesbah said.
The prime minister's energy adviser Tawfiq-e-Elahi Chowdhury, the state minister of power, energy and mineral resources Mohammad Enamul Huq and the chairman of Petrobangla Hossain Monsur attended the conference.
Amid severe gas crisis, the government has suspended giving new gas connections to the industries, commercial and household consumers from October 2009.
Mesbah said that Petrobangla was set to increase LPG production. In addition, the government was planning to go for LPG bottling projects in public-private partnership, he added.
He also said that the country has produced 20,000 tons of LPG last year.
Answering to a question whether it would create discriminations between household gas consumers as gas supplied through pipeline is cheaper than LPG, Mesbah said that the government would reduce the price gap between LPG and pipeline supplied gas to the households.
The government would increase the price of gas supplied through pipeline and reduce the price of LPG.
At present, Petrobangla's distribution subsidiaries are supplying 224 million cubic feet of gas a day to the households for cooking to meet a demand of 275 million cubic feet.
Hossain Monsur said that the country was running with a shortage of 500 million cubic feet of gas a day.
He said that Petrobangla with its subsidiaries and international oil companies would be able to supply 3000 million cubic feet of gas a day to the national grid by 2012.
‘We will be able to supply gas according to the demand by 2012. Petrobangla by its oil and gas exploration subsidiary, Bapex, has planned to drill at least 34 exploration, development and work-over wells in different gas fields by 2013', he said.
He also said that Petrobangla has repaired (work-over) nine gas wells in different fields and added 284 million cubic feet of natural gas a day to the national grid from January 2008 to December 2010.
Bangladesh Govt. to Popularise LPG
Dhaka: The government will encourage consumption of liquefied petroleum gas (LPG) instead of piped natural gas to ease the mounting gas crisis across the country.
According to sources the energy ministry has already asked the LPG firms to increase their import of LPG to meet the gross mismatch between the demand for, supply of, piped gas, especially in households for cooking and light engineering workshops.
The government decision to encourage LPG use has come at a time when gas crisis turned acute and the urban residents are struggling for cooking due to insufficient gas supplies and drastic fall in gas pressure.
Officials said the government is also actively considering reduction of duties and taxes on import of LPG and LPG cylinders to boost import and expand its use to ease the mounting gas crisis.
The import duty on LPG is around nine per cent, which includes five per cent customs duty, three per cent AIT and one per cent PSI charge.
Currently the country consumes around 100,000 tonnes of LPG every year, mostly by the urban people in district towns and light engineering workshops.
The state-owned LPG producer supplies 20 per cent of the market need and private players import the remaining 80 per cent.
LPG marketing in Bangladesh was pioneered by state-owned Bangladesh Petroleum Corporation (BPC) in the late 1970s, but with the increasing demand in the mid-1990s the government allowed LPG imports and permitted private entrepreneurs to invest in LPG import, storage and bottling facilities.
BPC's subsidiary, Eastern Refinery Ltd and natural gas fractionation plant at Kailashtila in Sylhet are the source of indigenous availability of LPG in Bangladesh from where the combined output is around 20,000 tonnes per annum.
A number of private firms are now engaged in marketing of LPG in Bangladesh that include Totalgaz, Bashundhara, Kleenheat, Jamuna Spacetech and BOC.
LPG importers seek duty waiver
Importers of liquefied petroleum gas (LPG) have demanded duty waiver on the import of relevant raw materials and capital machinery with a view to making available the fuel at an affordable price.
They said the higher duty structure makes LPG expensive to consumers.
The demand for LPG has gone up due to the government decision not to provide gas connections to households, they said.
The importers said the government should waive the duty on import of raw materials and capital machinery of LPG, which is now subject to duty & tax ranging from 11 per cent to 33 per cent, in the upcoming budget for 2011-12 fiscal.
The duty includes five per cent customs duty, 15 per cent value added tax, three per cent advance income tax (AIT) and one per cent pre-shipment inspection (PSI) charge for importing LPG cylinders.
"We received many orders in recent times and the orders are gradually increasing," a senior official of Bashundhara LP Gas Limited said, adding that the private firms could not alone make the price of the alternative fuel affordable.
"The price will definitely come down by a significant margin if the government waives duty on it," said the official of Bashundhara LP gas Ltd.