Only eight industries to get new gas lines

The government is likely to stop new gas connections to industries save for eight "economically vital" ones under a forthcoming regulation.

The eight industries considered to be economically vital are: garment, pharmaceuticals, fertilisers, agricultural products, ceramic, cement, steel and leather.

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 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 will the small industries get bigger?"

There are other economically vital industries like the light engineering, food manufacturing etc, he said. "Then why will they 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," Alam added.

Such a decision will be a barrier for new entrepreneurs, said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association.

"And fresh ideas are essential for furthering industrialisation."

Besides, if the difference in costs between piped gas and LPG is huge, small businesses will be in ruins, Hatem added.

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 applications will be approved for new connections.

Besides, 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 sittings with the stakeholders, including the business community and government officials.

At least two more sittings 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.

The cost of installation of storage facilities for bulk LPG for industries is Tk 1 lakh per tonne and there are additional costs for vaporising, according to Md Liaquat Ali, general manager (Technical Operations) of JMI Industrial Gas.

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. It only issued three show-cause notices last year.

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 sectors 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, Alam added.