Industrial use of LPG surges as gas supply inadequate, diesel costly
Industries desperate to continue production are now opting for liquefied petroleum gas (LPG) due to a massive disruption in the supply of grid or compressed natural gas (CNG) and a price hike of alternative fuel – diesel.
Even the industries mostly dependent on diesel and gas for their burners, boilers, ovens or fire-run instruments increased their LPG consumption to 10%, which was around 5% before the gas supply disruption since April this year and the diesel price hike in August, said Jakaria Jalal, head of public relations of Bashundhara LP Gas – the leading player in the LPG market.
The country's annual LPG demand is around 14 lakh tonnes, he said and added that the automotive sector consumes 5% and the remaining 85% of LPG is being used for cooking.
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The number of factories using LPG has more than doubled to around 1,000 this year, a senior official of a leading industrial LPG marketer, wishing to remain unnamed, told The Business Standard.
Nearly 60 large, over 200 medium and 700 small factories are currently using LPG, he added.
"Previously, only a few factories lacking a grid gas connection were asking for LPG to run their factory furnaces or boilers," said Tanzeem Chowdhury, chief executive officer of Omera Petroleum Limited – another leading player in the country's LPG market.
"Nowadays, we are getting many more calls from a wide range of factories for Omera Priority," he told The Business Standard.
For industrial LPG solutions, the official said his company last June launched a dedicated arm called "Omera Priority" with specialisation in the new business segment. The company's industrial LPG sales – under the brand names Omera Priority and Omera Gas One – tripled to over 3,000 tonnes in November, compared to the same month a year ago, he added.
Being the first mover, Omera now leads the industrial LPG business. It has already deployed 15 road specialised tankers for industrial sales only. Many of its competitors including Bashundhara, Jamuna, G Gas, Fresh, Uni, and Delta are also increasing efforts in the industrial segment.
Delta LPG Director Sameer Haque told The Business Standard that the company has been catering to a few factories, particularly in the Khulna region since its commercial operation began last year. "Currently, we have 20 industrial clients," he added.
Talking to The Business Standard, top officials from factories – from apparel to packaging to feed making or even steel mills – said many of them used to depend on CNG or diesel from nearby stations when they faced poor gas pressure.
However, the alternatives went beyond availability or affordability last August when gas shortage hit the CNG stations too and the diesel price soared to Tk114 per litre from Tk65 a year ago. Amid such a situation, many went for LPG.
Take Gazipur-based factory Reflex Packaging for an example. Without looking for CNG, it began using LPG to run its factory boilers a year ago and its Senior Maintenance Engineer Md Ashraful Alam is happy with the quality of the clean fuel at a reasonable cost and the required support from the LPG supplier.
Its sister concern M&U Packaging went for LPG tanks recently as no alternative helped its factory production.
Bhaluka, Mymensingh-based denim apparel exporter Apparels Wet Processing Limited began to suffer from the grid gas shortage in April this year and finally switched to LPG in September as it was desperate for timely shipments to its western buyers, according to its CEO Jobayer Hasan Shiplu.
Reflex Packaging's apparel exporting sister concern Meghna Knit Composite Limited also has chosen LPG for the same.
Jobayer said, "Waiting for grid gas which is available for four hours a day would have ruined my business."
No option other than LPG is available for his factory, he added and noted that LPG is now the cheapest among all except for the grid gas and CNG which are poor in supply.
Right now, fuel cost per MMBTU is Tk2,300 for LPG, lower than that of over Tk2,500 for furnace oil and over Tk3,000 for diesel, according to LPG marketers.
Engineer Abu Shamim, managing director of Quality Engineering and Quality Infrastructure said his firm is installing LPG solutions at 15-20 factories every month nowadays, which was insignificant a year ago.
Both Tanzeem Chowdhury and Jakaria Jalal are hopeful that the industrial LPG business would grow at least three times by 2024.
