LPG Sector To Face Mounting Pressure Without Green Banking Facility

Compared with other fossil fuels, LPG is a much cleaner source of energy. That's why, if Bangladesh is to achieve its goal of clean cooking for all by 2030, there is really no alternative to LPG. But the sector is now under immense strain after years of heavy investment. Many companies are already struggling, while others are on the brink of collapse. To prevent further damage, the government needs to step in with low-cost financing to help stabilize the industry. Bringing LPG under the Bangladesh Bank's Green Fund could be a practical step toward easing the crisis. It's also worth noting that LPG is the only energy segment in Bangladesh that operates entirely without subsidies, a fact that deserves recognition and support.

- These remarks were made by MD Abdur Razzaq, Founder and Managing Director of JMI Group, in an interview with Mollah Amzad Hossain, Editor of Energy & Power.

Many believe that due to overinvestment in the country's LPG sector, investors are now facing high risks. How do you view this situation, and what could be the way out of the crisis?

You are absolutely right. When the government finalized the LPG policy, it did not exercise adequate caution. Under this policy, 59 companies were issued licenses. In contrast, India has licensed only four or five companies in its LPG sector. South Korea has just three, and Thailand has four. In Bangladesh's small market, 29 operators are currently active, among which around 16-17 have already become sick. Many smaller companies, unable to sustain operations, have sold out to stronger ones.

It is also important to note that the LPG sector is the only energy subsector operating entirely without subsidies while regularly paying taxes and VAT to the government. Meanwhile, around 16 million tonnes of firewood are still being burned annually for cooking in the country. LPG is playing a vital role in replacing firewood as a competitive cooking fuel. Hence, government policy support is crucial for a sector that is now under severe financial strain.

To make it clearer, LPG is a clean fuel compared to other fossil fuels. Globally, the sector receives financial incentives, whereas the situation is quite the opposite here. The interest rate on our loans was previously 7-9%, but it has now risen to 14%, nearly doubling the cost of funds. Therefore, providing low-interest loans to this sector is essential.

While LPG is a fossil fuel, it is globally recognized as a green cooking fuel because it replaces biomass and other polluting fuels. The market in Bangladesh is also expanding. What policy support is needed to achieve the goal of ensuring safe cooking energy for all by 2030?