LPG receives industrial raw material status, importers to get 270-day credit facility
In addition, importers will be able to obtain buyers’ credit from foreign banks or financial institutions. They may also access bill discounting facilities through offshore banking units (OBUs) of local banks
Bangladesh Bank has extended major policy support to stabilise the supply of liquefied petroleum gas (LPG) and ease the import process, allowing importers to avail themselves of credit facilities of up to 270 days.
Under the new arrangement, LPG imports will now be treated as industrial raw materials, enabling businesses to import LPG on deferred payment terms through suppliers' credit or buyers' credit for a maximum period of 270 days, the central bank said in a circular today (12 January), which has been sent to all banks by its Foreign Exchange Policy Department.
According to the circular, LPG is primarily imported in bulk and subsequently bottled for distribution. Considering the various stages involved in processing, Bangladesh Bank has instructed that LPG be classified as an industrial raw material.
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Previously, a circular issued on 29 December allowed a 270-day usance period, the timeframe for deferred payment for industrial raw material imports. LPG importers will now enjoy the same facility.
In addition, importers will be able to obtain buyers' credit from foreign banks or financial institutions. They may also access bill discounting facilities through offshore banking units (OBUs) of local banks.
Bangladesh Bank noted that after import, LPG requires a considerable amount of time for storage, bottling, and marketing. The extended credit period has been granted to help importers maintain cash flow and to accelerate the import of this essential energy commodity.
Market insiders believe the move will ease immediate pressure on dollar liquidity, as importers will be able to settle payments over a longer period, reducing the risk of supply shortages in the domestic market.
The country's LPG market has recently faced significant volatility, with consumers reporting shortages and the unavailability of LPG at government-set prices.
In some cases, supplies could not be obtained even at higher prices, creating hardship at the consumer level.
Amid this situation, the government recommended easing LPG imports and sought Bangladesh Bank's intervention. Sources said the central bank issued the circular in response to that recommendation.
Stakeholders say the introduction of long-term credit facilities for LPG imports is expected to boost supply and contribute to stabilising the market.
