The Padma Oil Company, a statutory organisation under the power, energy and mineral resources ministry, has stepped forward to make liquid petroleum gas (LPG) more available as a primary fuel source for vehicles in Bangladesh.
The move comes as part of the government's ongoing efforts to increase LPG consumption in the country, where reserves of natural gas are depleting rapidly.
The listed retailer of petroleum, lubricant, grease, bitumen and LPG products plans to sell the eco-friendly alternative to fossil fuels through their registered filling stations.
As of fiscal 2018-19, Padma Oil, a subsidiary of Bangladesh Petroleum Corporation, had 695 active filling stations across the country, according to the company's annual report.
In this regard, a deal was signed with Energypac Power Generation Company on Tuesday, allowing the leading supplier of electrical equipment to set up LPG pumps and conversion workshops at Padma Oil's registered filling stations.
As per the agreement, Padma Oil will receive a Tk 0.50 royalty for each litre of LPG sold by Energypac through the state-run company's numerous filling stations.
Md Masudur Rahman, managing director for Padma Oil, signed a deal in this regard with his Energypac counterpart, Humayun Rashid, recently.
"This deal is a part of the government's endeavour to expand LPG use in the country," said Abu Sayed Raza, general manager of Energypac.
LPG is a by-product of refining natural gasses and crude oil. In the past, it was deliberately wasted as people did not recognise its value as a low-carbon fuel.
Currently, Energypac operates 30 LPG gas stations at various private filling stations, Raza said, adding that the company is permitted to establish up to 300 LPG filling stations.
"So now, we have a target to cover nearly 200 of Padma's registered filling stations," he continued.
The company mainly aims to bring the northern and southern regions of Dhaka under LPG coverage despite already having the capacity to supply the whole country.
Similarly, Energypac plans to continue its LPG expansion by bringing other private companies under its umbrella.
"The government wants to see LPG pumps at all the filling stations belonging to the Padma, Meghna and Jamuna companies so that the eco-friendly fuel source becomes available for all," Raza said, adding that the deal was signed with consent from Bangladesh Petroleum Corporation.
In regards to the total investment required to establish LPG filling stations, Raza said it will depend on how big an investment the owners of any given filling station wants to make.
Meanwhile, the Bangladesh Securities and Exchange Commission has allowed Energypac to seek a cut-off price for its shares through bidding among eligible investors, which is required to go public under the book-building method.
Through its shares, Energypac aims to raise a Tk 150 crore fund that will be used to expand the company and repay loans.
In fiscal 2018-19, the company's consolidated earnings per share was Tk 3.13.
"When all the filling stations of state-run petroleum products sellers would feature LPG gas, then price discrimination will be run out," Raza said.
Currently, the price of LPG gas varies from station to station, he added.
As of yesterday, Padma Oil's stock prices dropped by 1.64 per cent to Tk 216.
In 2018-19, Padma Oil sold 20,173 tonnes of LPG. However, the company's main product is diesel with 45.93 lakh tonnes of diesel being sold in the country during the same period.
"We are yet to decide where Energypac will invest," said Sohel Abduallh, deputy general manager of Padma Oil.
"But since it is allowed to invest, we have target to make the facility available in all our stations," he added.