Prospect and challenges of auto gas in Bangladesh as green fuel

The transport sector is a leading contributor of carbon emission and greenhouse gas effect in any country. Equally important is that of all transport-related pollution, nearly 95 percent comes from road transport in the country.

Research has even shown that vehicular pollution as also vehicle-induced dust can even be damaging to roadside plants and highway vegetation, considered to be a natural sink for the pollutants, and therefore constitutes a regressive contribution to the larger environmental cause. As a human being all of us have equal responsibility to protect the earth from curse of carbon emission.

In this context of environment pollution, there is a concept of green fuel in transport sector. And that is called auto gas generated from LPG or Liquefied Petroleum Gas. LPG is a hydrocarbon fuel composed primarily of propane and butane.

LPG is commonly used as a fuel for cooking and powering vehicles. That is made during natural gas processing and oil refining. When the LPG fuel used in cars is called Auto Gas. It's cleaner, greener and cheaper comparing to other conventional fuel available in market.

LPG Auto gas is environmentally friendly as well used friendly alternative fuel in Bangladesh. CNG converted car/vehicle (150cc) with 60WL cylinder can run 90-100km per filling (60 liter LPG cylinder).

In the year of 2000 there was tremendous air pollution in Dhaka and other major cities. For immediate solution Government made a policy for the setup of CNG (Compressed Natural Gas) station and encouraged peoples for the using of CNG instead of Gasoline (Petrol, Octane) as it is both of environment friendly and cheaper than other fuels but Government again stopped the connection of new CNG station in 2009 due to the shortage of natural gas.

In 2016, the government again made a policy for the setup of LPG Autogas station instead of CNG station. Following this LPG policy already more than 900 LPG Autogas station has been built and more than 200 are under construction.

Almost all district now under coverage of LPG Autogas station so vehicles can top up LPG from anywhere of the country. There are around 100 thousand vehicles are converted to LPG System from more than 50 conversion workshops.

Category of vehicles using LPG is namely 3 wheeler, Private car and microbuses. Consumption of LPG in Autogas sector is around 12,000 MT/month. Price of octane is Tk. 130.00 per Liter whereas Price of LPG Autogas is varies from Tk. 45 to 60 so customers are getting fuel in cheaper price. Capital invest in this sector is around Tk. 1000 crore.

NBR Policy can help to develop local industry for manufacturing of all LPG equipment in Bangladesh to support demand of Industrial LPG system, Autogas and satellite plant and save huge foreign currency by reducing import cost.

Due to the shortage of natural gas and higher cost of Petrol/Diesel/octane, Demand of using LPG has been increasing day by day. Once LPG was used only for cooking purpose but now it is expanded to Autogas and industry sectors. 5/7 years back LPG consumption was only 1 lac ton whereas now it's increased to more than 1.7 million ton per year. Growth rate is more than 20 percent.

For the using of LPG in autogas and industries lot of LPG equipment like LPG Storage Tank, Vaporizer, Dispenser, pumps, car conversion kits, Multi valve, Auto tank, pressure regulating units etc. Right now all these machineries are imported from different countries like Turkey, Italy, and China and consume more than 50 million US Dollar per year as import expense. This import cost can be reduced up to 50 to 60 percent by establishing factory in our country.

The main problem of establishing local factory is NBR duty policy. As per NBR tariff policy Importer can import all these capital machinery by paying just 1 percent duty whereas factory owner has to pay 37 percent duty for importing of raw materials.

So rectification of NBR tariff policy is vital issue for the developing of local industry. By establishing LPG industry we can meet the local demand and export to other countries as well. We have submitted the detail analysis for the modification of tariff policy in last pre-budget conference with NBR chairman but our proposal has not been considered at all. We again are requesting concern authorities (NBR, BIDA, EZ, BSCIC, SME foundation etc) to make policy for the development of local LPG industry.

LPG auto gas sector has been facing a lot of challenges as maximum LPG Autogas stations are operating in loss due to poor sales condition.

Then auto gas station owners are not getting all licenses easily due to the lack of coordination among government authorities. After that adequate number of gasoline driven vehicles are not converting to LPG.

In Bangladesh price of all automotive fuel except LPG are determined by the government periodically and persist for long time (at least one year) but auto gas price changes every month. This price fluctuation is very new to the customers. This is also a major reason of customer's dissatisfaction to auto gas. Considering this statistics and challenges today's LPG auto gas stations are not in good condition which should be addressed by authority and major stakeholders.

To flourish the auto gas industry as green fuel, the station owners have been advocating for taking necessary steps to make all auto gas station sustainable by increasing number of regular LPG vehicles.

At present customers are not stable due to the instability of the LPG prices. Parallel alternative fuel is CNG which price is stable at Tk. 43 per cubic meter but LPG price changes every month. When the price goes up some commercial customers switches the fuel option from LPG to CNG and reversely when price goes down satisfactorily, these customers again come back. So the government authority (BERC) should look into the matter during fixation the automotive fuel price.

The entrepreneurs need waiver of VAT on LPG auto gas. From the association, we have requested to NBR (National board of revenue) to waive up the existing 7.5 percent value added tax from LPG auto gas. This will help to decrease the LPG retail price.

In present policy one can establish new auto gas station within 2/4 km of existing one whereas existing one is still in losses. So during allowing new Station to be established, authority should consider the business position of existing one.

We should remove the complexity of licensing issues of existing and upcoming station. Current policy is not business friendly. Almost all the station owners have been suffering to get licenses from different government authorities like Explosive department, BERC, Department of Environment, Roads & Highway etc. So we need to rectify all these clauses.

Expand the business area: Government should take initiatives/policy to convert the private and government vehicles to LPG. All types of vehicles like motorcycle, cars, buses, trucks should be converted to LPG system.

The authorities should minimise the price difference between CNG & LPG. The government authority (BERC) should take steps to minimize the price difference between CNG & LPG.

Mohammad Serajul Mawla is a graduate of BUET and president of Bangladesh LPG Autogas Association.