Bangladesh Bank allows 270-day credit for LPG imports

Bangladesh Bank has relaxed import rules for liquefied petroleum gas, permitting importers to use credit facilities of up to 270 days, a move aimed at easing dollar liquidity pressure and ensuring steady LPG supplies in the domestic market.

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, according to a circular issued by the central bank on Monday.

The circular, sent to all scheduled banks by the Foreign Exchange Policy Department of Bangladesh Bank, noted that LPG is primarily imported in bulk and subsequently bottled for distribution.

Considering the multiple stages involved in processing and marketing, the central bank has decided to categorise LPG as an industrial raw material.

Earlier, a circular issued on December 29 allowed a 270-day usance period — the timeframe for deferred payment — for industrial raw material imports. With the latest decision, LPG importers will now enjoy the same facility.

Besides, importers will be allowed 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 said that after import, LPG requires a considerable amount of time for storage, bottling and marketing.

The extended credit period has been granted to support importers’ cash flow and accelerate the import of this essential energy commodity.

The move comes amid a severe LPG supply crunch in the domestic market that has persisted for over two weeks.

During this period, LPG prices have surged sharply, with a 12kg cylinder being sold at nearly double the government-fixed price.

A cylinder officially priced at TK 1,300 is now selling for as high as Tk2,500 in some areas.

Similarly, the price of a 35kg LPG cylinder has risen to Tk5,000, compared to its regulated price of Tk3,200, causing widespread hardship for consumers.

LPG traders attributed the crisis to a shortage of vessels, complications in opening letters of credit (LCs), and the temporary shutdown of several LPG plants.

Industry insiders expressed optimism that the special facilities provided by Bangladesh Bank would play a crucial role in normalising LPG supply in the market in the coming days.