Bangladesh Bank has introduced a major policy support to ensure a smooth supply of liquefied petroleum gas (LPG) and ease the import process by recognising LPG as an industrial raw material.
As a result, LPG importers will now be able to enjoy a deferred payment facility of up to 270 days.
The Foreign Exchange Policy Department of Bangladesh Bank issued a circular in this regard on Monday, which has been sent to all banks.
According to the circular, LPG is generally imported in bulk and later bottled and marketed in cylinders, a process that requires considerable time for storage, bottling and distribution. Taking this into account, the central bank has decided to extend additional credit facilities by treating LPG as an industrial raw material.
On December 29, Bangladesh Bank had issued a circular allowing a maximum 270-day deferred payment facility for the import of industrial raw materials. With the latest decision, LPG imports have now been brought under the same facility.
Under the new arrangement, importers may avail themselves of supplier credit as well as buyer’s credit from foreign banks and financial institutions. In addition, bill discounting facilities can be accessed through the offshore banking units of designated banks, subject to prevailing foreign exchange regulations and prudential loan policies.
Bangladesh Bank said that the extended payment period is intended to ease cash flow pressure on importers, as LPG takes a longer time to reach the market after import. The move is also expected to help expedite imports of this essential energy product.
Industry insiders believe the decision will help reduce immediate foreign exchange pressure linked to LPG imports and lower the risk of supply disruptions in the domestic market.
The decision comes amid recent volatility in the LPG market, where the product has been unavailable at government-set prices in many areas and scarce even at higher prices in some places, adding to consumer hardship. In this context, the government had recommended that Bangladesh Bank facilitate LPG imports, sources said.
The circular, issued by Bangladesh Bank’s Foreign Exchange Policy Department-1, was signed by the department Director Md Harun-or-Rashid. It added that all other existing provisions will remain unchanged and instructed banks to inform their concerned clients accordingly.
