After households, the government is likely to stop new gas connections to industries save for a select few under a forthcoming regulation.
Only the “economically vital industries” that applied for new connections and did not get it until last year could get supply, as per the draft guideline on using liquefied petroleum gas (LPG) as an alternative fuel in industries.
The eight industries considered to be economically vital are: garment, pharmaceuticals, fertilisers, agricultural products, ceramic, cement, steel and leather.
The other industries seeking new connections will need to build LPG units as an alternate option to gas, according to the draft guideline, which is being formulated to “reduce the pressure on natural gas and to ensure uninterrupted energy supply by expanding multiple use of LPG”.
Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry, said: “If they want to stop new connections, then how the small industries will become bigger?”
There are other economically vital industries like the light engineering, food manufacturing etc, he said. “Then why they will not give emphasis to these industries?”
Besides, the LPG industry is import dependent.
“Our main focus should be local gas exploration. We should also remember that production costs will increase for using LPG,” he added.
Such a decision will be a barrier for new entrepreneurs and promoting new ideas are essential for industrialisation, said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association.
Titas, the largest among the six gas distributors, has about 500 pending applications from industries for new connections. In the last five years, Titas only provided 150 new connections to industries.
The applications have been pending for long, said Titas officials on the condition of anonymity as they are not authorised to speak with media.
The energy division already formed a committee in January to sort out which industries will be given new connections.
The government has already announced that it will not provide new connections to the industries that are located outside of industrial zonal areas.
On December 6 last year, the government formed a 14-member committee to formulate a policy guideline.
The committee, headed by Md Shameem Khan, director general of the hydrocarbon unit of the energy and mineral resources division, already had 2-3 seatings with the stakeholders, including the business community and government officials.
At least two more seatings are needed to finalise the guideline, Khan told The Daily Star.
Asked about the list of economically vital industries, he declined to comment.
“We will be able to comment only after submitting the documents,” Khan added.
Production is insufficient in comparison to the huge demand for natural gas, the draft guideline said.
As a result, industrial production is being hampered. Besides, the use of LPG in the industries are increasing.
By 2030, the demand for LPG will increase by threefold, according to the draft guideline.
The members of the LPG Operators Association of Bangladesh will supply LPG to industries.
“Installing an LPG bulk in the industries costs around Tk 1 lakh per tonne. Besides, they require additional cost for vaporising,” said Md Liaquat Ali, general manager (Technical Operations) of JMI Industrial Gas Limited.
The price of LPG will be different from the domestic consumers, read the guideline, adding that the Bangladesh Energy Regulatory Commission will set the price from time to time.
Following a directive of the High Court, the BERC started fixing the bottled LPG price in April 2021, but there are serious allegations that no distributor follows the price.
The BERC never made any punishment to any of the operators. Last year, it issued three show-cause notices.
To attract LPG usage in industries, the draft policy called for tax cuts.
“It seems that the government is trying to increase the LPG operators’ business by setting a policy guideline,” said M Shamsul Alam, the vice-president of the Consumers’ Association of Bangladesh.
The government had obligations to provide connections to all, he said.
“But later they gave the domestic and transport sector to the private entities. But they didn’t make the market competitive and didn’t strengthen the regulatory body. A group of businesses made the sector an oligopoly. They are selling LPG as they wish — they don’t follow the BERC rate and are making predatory profits.”
With this decision, the small and cottage industries will struggle as their primary energy expenses will shoot up.
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