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         American Journal of Agricultural Science, Engineering and Technology 
 

 
 

 ISSN: 2158-8104 (Online), 2164-0920 (Print), 2021, Vol. 5, Issue.2 
http://journals.e-palli.org 

 



         American Journal of Agricultural Science, Engineering and Technology 
 

 
 

 ISSN: 2158-8104 (Online), 2164-0920 (Print), 2021, Vol. 5, Issue.2 
http://journals.e-palli.org 

The American Journal of Agricultural Science, Engineering and Technology (AJASET) is 
blind peer reviewed international journal publishing articles that emphasize research, 
development and application within the fields of agricultural science, engineering and 
technology. The AJASET covers all areas of Agricultural Science, Engineering and 
Technology, publishing original research articles. The AJASET reviews article within 
approximately two weeks of submission and publishes accepted articles online immediately 
upon receiving the final versions.  

Published Media: ISSN: 2158-8104 (Online), 2164-0920 (Print).  

Frequency: 2 issues per year (January, July)  

Area of publication: Agricultural Science, Engineering and Technology. The subjects 
covered by the journal includes but not limited to:  

 

Agriculture 
Agricultural Economics and Agri-business  
Agricultural Engineering  
Agricultural Statistics  
Agricultural Extension and Development 
Agronomy  
Agro-tourism  
Animal Science and Nutrition  
Applied Agriculture  
Applied Economics and Finance 
Aquaculture  
Bioinformatics  
Big Data 
Biotechnology and Biochemistry Climate 
Change and Green Technology 
Collaborative Engineering  
Computer Science and Engineering 
Computational Biology  
Climate Change 
Dairy Science & Poultry Science  
Decision Support System  
Ecotourism  
Environmental Science 
Fisheries 

Dental and Medical Science  
Experimental Agriculture  
Food science, Engineering and 
Technology Genetics Technology  
Geophysics  
GIS, GPS, and Remote Sensing  
Precision Farming 
ICT for Agricultural Development  
IoT, 4IR 
Irrigation and Water Resource Engineering 
Land Use and Development  
Mathematics  
Modeling of Crop and Animal System 
Pathology and Plant Protection  
Fisheries  
Plant Breeding and Crop Science  
Post-harvesting Technique and 
Technology Precision Agriculture  
Production Engineering  
Renewable Energy 
Social Science and Agricultural 
Development Soil Science  
Tropical Agriculture  
Veterinary Science and Technology 



         American Journal of Agricultural Science, Engineering and Technology 
 

 
 

 ISSN: 2158-8104 (Online), 2164-0920 (Print), 2021, Vol. 5, Issue.2 
http://journals.e-palli.org 

EDITORIAL BOARD 

 

Chief Editor 

Dr Mamun-Or-Rashid 

Professor, Dhaka University, Bangladesh 

 

Board Members  

Dr. Sumit Garg, IL, USA 

Professor Dr. James J. Riley, The University of Arizona, USA 

Dr. Ekkehard KÜRSCHNER, Agriculture Development Consultant, Germany 

Professor Dr. Rodriguez Hilda, USA 

Professor Dr. Michael D. Whitt, USA 

Professor Dr. Wael Al-aghbari, Yemen 

Dr. Clement Kiprotich Kiptum, University of Eldoret, Kenya 

Professor Dr M Shamim Kaiser, Professor, Jahangirnagar University, Bangladesh 

Professor Dr Mohammad Shahadat Hossain, Chittagong University, Bangladesh 

 

 

Managing Editor 

Md. Roshidul Hasan 

Professor, Department of Computer Science and Information Technology  
Bangabandhu Sheikh Mujibur Rahman Agricultural University



         American Journal of Agricultural Science, Engineering and Technology 
 

 
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CHALLENGES OF LPG SUPPLY, DISTRIBUTION & PRICING IN GROWING 
MARKET: BANGLADESH CASE STUDY 

Md. Mehedi Hasan1*, Md. Foysal Alam Bhuiyanb2, Engr. Md. Jakaria Jalal3 

DOI: https://doi.org/10.5281/zenodo.5271670  

ABSTRACT 

The prime energy scarcity is nowadays a mostly the debated issue in Bangladesh in the awaken 

of spreading energy and fuel crisis. Pipeline natural gas support only 6 % domestic 

consumption of total population by 16 % of total produced gas which is declined mode. The 

claim of natural gas is on the continuous increase to meet domestic needs in the city, suburban 

areas together with industrial, commercial, power generation and diverse usage against the 

scarcity of gas. The demand for natural gas is on the continuous increase to meet domestic 

needs in the urban, suburban areas alongside industrial, commercial, power generation and 

diverse usage against the scarcity of gas. In this situation, LPG becomes a popular alternative 

energy source to reduce the natural gas crisis along with providing clean fuel in rustic areas. 

LPG is using by about 81% in its total amount for domestic purposes. At present in 2018 LPG 

demand in Bangladesh is approximate 750,000 MT and in future 2025 it would be 250, 0000 

MT with growth rate 25%, 17 %, 14%, 15 %, 8%, 20% and 17% respectively. Now a day 12 

KG LPG cylinders price is BDT 1150-1200 because of the variety of market barriers, 

government VAT and higher transaction costs which is not affordable for the middle as well as 

a low-income family though Bangladesh government fixed the price every month. LPG could 

assume an increasingly significant job in giving cooking energy to low-middle pay family units 

in Bangladesh if an appropriate advertising structure and circulation plan are masterminded. 

The aim of this project is to find out the challenges of LPG supply, distribution, and pricing in 

the growing Bangladesh market and to make a well planned and details road map so that LPG 

companies of Bangladesh can serve 70% of the domestic cooking fuel through LPG by 2025. 

Keywords: Natural Gas, Shortage, LPG market growth, Challenges, Bangladesh. 

1 Department of Petroleum and Mining Engineering, Jashore University of Science  
    and Technology, Jashore 7408, Bangladesh 
2 Executive, Corporate and Strategic Sales, Bashundhara LP Gas Ltd.  
3 Head of Division, ED, Sales, Bashundhara LP Gas Ltd. 
* Corresponding Author: Md. Mehedi Hasan, Department of Petroleum and Mining 
Engineering, Jashore University of Science & Technology, Jashore 7408, Bangladesh. 

Email: mehedi_pme@just.edu.bd 



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INTRODUCTION 

Liquified petroleum gas (LPG) initiate by Dr. Walter Snelling in 1912 is a non-inexhaustible 

wellspring of energy like every non-renewable energy source which is removed from raw 

petroleum and flammable gas where the principal creation is three or four carbon particles. 

The typical parts of LPG therefore, are propane (C3H8) 30% and butane (C4H10) 70%. Little 

groupings of different hydrocarbons may likewise be available (EduGreen, 2019; Hahn E., 

2019). Under slight pressure for LPG (propane) goes from 152 kPa (24 PSIG or 1.5 bar) at 

0ºC to 2482 kPa (360 PSIG or 24.8 bar) at 70ºC) (Hahn E.  2019). LPG turns into liquid form 

and can then be stored in tanks. LPG converted back to gas before being burned. Therefore, 

that LPG cylinder is typically filled to 80%, meaning 80% liquid and 20% vapor (EduGreen, 

2019; Hahn E., 2019). 

Bangladesh is an extremely fascinating and engaging business sector for LPG in light of the 

fact that it is a spotless and safe fuel that has a scope of properties nearest to oil. LPG not just 

use in households, there are huge prospects of LPG in Autogas. Subsequently, the future LPG 

market in Bangladesh is high, as the normal income level per family has been developing 

continually for quite a long time (Rahman M., 2017; Islam M.S, 2018; Power System Master 

Plan 2016; ADB TA 8839 BAN, 2016). Then again, the appeal of natural gas is on an 

unending increment to address local issues in the urban, rural regions close by powered, 

business, control age and differing utilization against the deficiency of gas. According to 

energy expert, the remain natural gas reserve will be kaput within 10 to 15 years which is 

shown in projected demand and supply in figure 1 and figure 2 (Energy Scenario 

Bangladesh:  2017-18 2019; Hydrocarbon Unit, 2021).) For example, in the year 2035, total 

demand (8000 MMSCFD) supply (5880 MMSCFD) gap nearly 2120 MMSCFSD. To meet 

the supply shortage, LPG is the best solution for household energy supply (Islam M.S 2018, 

Energy Scenario Bangladesh:  2017-18 2019; Power System Master Plan 2016; Hydrocarbon 

Unit, 2021).) 



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Figure 1: Produced vs remaining gas reserve for all fields in Bangladesh (Power System 

Master Plan 2016, Energy Scenario Bangladesh: 2017-18 2019; Hydrocarbon Unit., 

2021). 

The principal purpose of the LPG sector is to attain household fuel demand and 

transportation. The aim of the paper is to find out the challenges of LPG supply, distribution 

& pricing in the growing Bangladesh market and its Ultimate Solutions by taking with local 

stockholder, businessman, market visit and analyzing the energy situations in Bangladesh. 

 

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         American Journal of Agricultural Science, Engineering and Technology 
 

 
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Figure 2: Projection of Gas production in Bangladesh (Energy Scenario Bangladesh:  

2017-18 2019; HydrocarbonUnit. (2021). 

Why LPG Is the Best Option for Domestic Purpose in Bangladesh? 

About 160 million+ inhabitants, Bangladesh needs a very accurate and comprehensive plan to 

supply primary fuel for cooking. Pipelined natural gas support 6 % domestic consumption of 

total population by 16 % of total produced gas which is declined mode (Islam M.S 2018, 

Islam M.S 2018, Energy Scenario Bangladesh:  2017-18 2019;) 

As per the Bangladesh government plan, around 2.3 million NG residential clients and 0.18 

million CNG autos to be changed over in LPG/different options by 2025. On the other hand, 

LPG (Propane 2572 Btu/ft3 , Butane 3225 Btu/ft3 ) has higher calorific value than petrol, 

wood, kerosene and produce less CO2, ultra-fine particulates, NOx than petrol or diesel 

engine (TinleyTech, Chowdhury I. 2018, Engineering ToolBox). It not only is good for the 

engine but also for the environment as it is free of lead and contains very low sulfur and other 

heavy metals. In adding to the fact that LPG is economy than petrol and diesel when relating 

the cost per mile for fuel. 

 

 

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Present LPG market situation in Bangladesh 

Bangladesh's LPG demand is just 2% of absolute oil demand, and under 0.01% out of the all-

out energy request (Chowdhury I., 2016; Habib, W. B., & Molla, M. A.-M., 2019).) which 

can be expanded by the inaccessibility of new NG associations at household, expanding the 

cost of kerosene and diminishing openness of firewood. 

However, LPG request is expected to develop provocatively as a substitute for household 

cooking fuel and transportation fuel (as Autogas). The rising interest for LPG is an outcome 

of exhausting gas stores in the country (Habib, W. B., & Molla, M. A.-M., 2019). 

About 81% of total LPG in Bangladesh is used for the domestic purpose, 14% is used for the 

Industrial purpose, 1% is used for the large industry, 1% as transport called LPG as Autogas 

and 3% is used for other purposes (Shown in figure 3) where Bashundhara and Omera’s 

market share nearly 44% flowed by Jamuna - 17%, BM - 11%, Laugfs - 7%, TotalGaz -5%, 

others 16%. (Rahman M., 2017; Islam M.S, 2018; Islam M.S, 2018; Chowdhury I., 2016; 

Habib, W. B., & Molla, M. A.-M., 2019) 

 

Figure 3: Sector wise LPG uses in Bangladesh (Islam M.S, 2018; Rahman M. A., 2018; 

Chowdhury I., 2018)  

The LPG market increasing (2016-50 %, 2017 -51 % and 2018 -31%) dramatically last five 

years and predicted that will increase 2,700,000 MT in 2025 from 131,916 MT in 2015. The 

LPG market and its forecast up to 2025 with year-by-year growing percentages given 

in figure 4 (Rahman, M. A., 2018; Mahmud F.,2019). 

 

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Small Industries
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Large Industries
1%

other
3%



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Figure 4: The LPG market and its forecast up to 2025 (Islam M.S 2018, Jahangir S. 

2018, Bangladesh LPG Import Forecast 2018-2025, Mahmud, F. 2019.) 

This graph clearly indicates that if 2.30 million natural gas users and 0.18 million CNG users 

converted to LPG, the market will be higher than the forecast.  

 

CHALLENGES OF LPG SUPPLY, DISTRIBUTION & PRICING IN BANGLADESH  

 

Challenges of LPG Supply in Bangladesh Market 

In 2017, the World LPG Association’s annual report mentioned: Bangladesh one of the 

fastest-growing markets of the World. Within five years, the number of import terminals 

reached 18 (eighteen) from 6 (six). With initial pioneer investor Bashundhara, Jamuna 

Spacetech, TOTAL and LAUGFS, Omera, BPC, few other local big names added to the 

importers’ list, in addition to the old players’ reinvestment. More than 55 privet LPG 

companies in total in Bangladesh, which are directly or indirectly, involved in the LPG 

business. At present condition more, than 50 LPG companies get a license from the 

Government for business in Bangladesh and from those companies five or six will come to 

operation in next 10 to 12 month and about 20 LPG companies are now in the operation field 

in Bangladesh (BEE R.E, 2012; Islam M.S, 2018; Islam M.S ,2018; Makeen Energy 

Published, 2017; Mahmud, F., 2019). 

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LPG Import   Import Forcast  



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Private sector import LPG (more than 95% of the country LPG demand) from Singapore, 

Malaysia, Saudi Arabia, Abu Dubai, and Kuwait by Saudi Aramco (the state-owned oil 

company of Saudi Arabia) monthly contract price. The buyer has to pay Aramco Contract 

Price during their order for bulk LPG from the global market and need to add the freight per 

ton charge (for shipment to Bangladesh) which reached in Bangladesh after 2-4 months later 

(Islam M.S 2018; ADB TA 8839 BAN 2016; Mahmud, F., 2019).). Almost the total amount 

of LPG demand in our country is met by the imported LPG from abroad by Bulk LPG Cargo 

Ship the supply chain of LPG given in figure 5. 

 

Figure 5: LPG supply procedure in Bangladesh 

As LPG imported by LPG cargo ship, so seaport is also an important factor for LPG import. 

Other hand government policy and Saudi Aramco contract prices are big challenges for LPG 

supply in Bangladesh which are shown in figure 6. 



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Figure 6: LPG Supply Challenges in Bangladesh (BEE R.E , 2012; Islam M.S, 2018;  

ADB TA 8839 BAN 2016) 

Challenges of LPG Distribution in Bangladesh Market 

LPG business is entirely different than FMCG business or any sustenance and drinks like a 

one-time business. This business is all about a close relationship with the client, merchants, 

retailers, and transporters. The dispersion procedure of LPG in Bangladesh appeared in figure 

7. To do a good business by following all this criterion some challenges have come forward: 

1)      Managing cylinder supply chain 

Managing cylinder supply network is the most down to earth challenge in LPG 

business, which is a considerable amount overwhelming in weight and cost too is the 

way to fortify the organization to do the business easily. 

2)      Growing up the safety culture among the distributors and retailers 

 Growing up the safety culture among the distributors and retailers is also a big 

challenge to grow the business in a sustainable manner. 

3)      Lacking awareness 

Lacking consciousness of doing good faith business among wholesalers and 

companies is also a challenge in recent days. 

4)      Malpractices by ill-motivated executive 



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 Malpractices by the ill-motivated executive, traditional bureaucratic delays from 

different Government bodies. 

5)      Infrastructure 

The existing infrastructure at Bangladesh ports for LPG is inadequate to meet present 

demand. The Draft problem of the river, the large ship can’t enter those rivers from 

the deep sea. Therefore, the distribution cost is increased. Due to inadequate import 

facilities on the coast, inland movement is required and the costs are substantial. In 

Bangladesh, there is more than 18 LPG terminal in 2018 and it will be reached to 30 

in 2025 .   Almost more than 15 satellite filling stations are established by various 

LPG Company (where Bashundhara LP Gas and Omera Petroleum contain 3 LPG 

satellites each of them) to distribute and maintain the LPG cylinder chain all over the 

country. Rangpur Division (districts like Rangpur, Dinajpur & Thakurgaon) and 

Sylhet Division (districts like Mowlabubazar, Hobigonj, Sunamjganj ) have lower 

penetration in LPG coverage as compared to other divisions through the river. LPG 

transportation via road costly than transport by the river with small LPG vessels 

(Chowdhury I. 2016;  Energy Scenario Bangladesh:  2017-18 2019;  ADB TA 8839 

BAN 2016). 

 

Figure 7: LPG distribution process in Bangladesh 



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The BRTA laws to carry LPG cylinder, executive distribution channel, higher premium cost, 

consumer behaviors are the big challenge for growing LPG market in Bangladesh 

 

Challenges of LPG Pricing in Bangladesh Market 

LPG can play a vital and useful role to provide a secure primary energy mix. The price of the 

LPG cylinder at customer ends mainly depends on government import policies, LPG station 

licensing process, transportation, relevant infrastructure, hidden cost, etc. which are shown 

in figure 8. The main challenges of LPG pricing in Bangladesh are pricing strategy, 

regulations, necessary supply chain development, future needs, technical and technological 

efficiency, assessment of futuristic demand growth and scopes for use in industry and 

transport communication sector, domestic users' and safety guidance, etc. 

 

Figure 8: The LPG Cylinder Price Dependency in Bangladesh 

The operator of Bangladesh purchases LPG from the international market either in spot or 

term contract. For the pricing of LPG, some challenges come forward are disused below. 

 

The Saudi Aramco Contract Price 

The Saudi Aramco Contract Price is the most important factor that determines the LPG prices 

in Bangladesh. It is also known as “CP Price”. The operators purchase LPG from the 

International market either in spot or term contract. Its formula is generally based on CP plus 

freight and premium. There are several factors that decide the freight and premium, but the 

CP always remains constant for a month. Saudi Aramco is responsible to declare monthly CP 

LPG Cylinder 
Price

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cost

LPG 
Association

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Producer & 
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Equipments 
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Manufactur

er and 
supplier



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for the International market. The importers have to pay for freight, premium and necessary 

duty & taxes to release the gas from the ship. After including all sorts of overheads the 

expanses the gas is solid the market in the different pack sizes. 

LPG price for customer = Saudi Aramco Contract Price + Premium cost + Cylinder refilling 

cost + Dealer profit + Distributor profit + Local seller profit 

Vat on LPG Accessories 

Vat on LPG accessories is also a big challenge for LPG pricing. LPG accessories like LPG 

cylinders, LPG valves, Regulators, hose pipe, clips, burners of different sizes. Unless these 

items get the benefit of VAT exemption, the penetration LPG shall always remain 

challenging 

Aggressive marketing to capture market share 

The operator wants to sell to their distributors & dealers at a lower rate with a very low 

margin to capture market share. Therefore, it is one of the practical challenges for LPG 

pricing 

Different freight and premium for different companies 

Some companies can bring cargo at a relatively lower price because of their storage 

advantage. So, these operators do not tend to increase the price right away and putting the 

other operators in pressure. So, it is also a big pricing challenge for LPG Company. 

 

CONCLUSION AND RECOMMENDATION 

 

Conclusion 

Bangladesh LPG industry has a great prospect no doubt but we have to consider a few issues 

resolved as discussed above. Moreover, we should not overrate the industry in such a way so 

that investors are jeopardized in the end upon invested and get ruined their money. If all the 

challenges are be solved then the LPG industry of Bangladesh will take a sustainable position 

in the energy sector and they will be able to fulfill the target to serve 70% of the domestic 

cooking fuel will be served through LPG by 2025, with a reasonable price for the middle- and 

low-income people. In the invigorate of expanding energy emergency, the following 

suggestions can be pursued upgrade of LPG ubiquity. By following those recommendations, I 

think the LPG companies will be able to spear the LPG among the rural and sub the rural part 

of the country and they will be able to make LPG more popular than other traditional fuel 

sources (wood, animal waste, kerosene, etc.)   

Recommendation 



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 Developing new higher capacity import terminals near deep-sea ports (Draft – 50 

meter) to facilitate the handling of higher capacity carriers (50,000 -100,000 MT) 

 High capacity bulk stories facilities (mother storage) near deep seaports need to 

construct. 

 Dredging needed in the river to transport the LPG within major strategic locations of 

the country for efficient & cheaper way of LPG distribution. 

 Proper national LPG policies for sourcing, tariff, retail distribution and market 

management imposed by GoB. 

 To cut the distribution cost of LPG, LPG rectification may use in high rise building 

gas supply 

 Government should take the necessary steps to reduce the monopoly business in the 

LPG sector. 

 Increase the price of pipe gas (two-burner 2500 BDT and one burner -1500 BDT) and 

subsidize in LPG cylinder price (12 kg cylinder - maximum 800 BDT). 

 

Highlights 

 16 % natural gas used by 6 % of total population 

 LPG is the household alternative energy in absence of natural gas 

 The Demand of LPG will increase 320 % within next 10 Years 

 Government policy, Infrastructure, awareness, international price are the main 

Challenges to grow the LPG market. 

 Government should take necessary steps to reduce the challenges to increase the 

market share of LPG market in Bangladesh 

 

 

REFERENCES 

 

ADB TA 8839 BAN: Study on Energy Security Draft Final Report on Energy Security 

(2016), 



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Available:.https://powerdivision.portal.gov.bd/sites/default/files/files/powerdivision.po

rtal.gov.bd/page/c96429b5_a481_4ee3_8095_6746b376dcfd/TA%208839_Revised%2

0Draft%20Final%20Report%20on%20Energy%20Security%20(Appendix%20C)_Sub

mission_29th%20June%202016.pdf  . Accessed date 22 June 2021. 

Bangladesh LPG Import Forecast 2018-2025, LightCastle Primary Research. Available: 

https://datasets.databd.co/datasets/a530b520-be31-11e8-914b-2d5ef8e77230/resource-

bd4189a0-be31-11e8-9de5-0bb7b3c2b0ce    Accessed 15 May 2021. 

BEE R.E 2012 “LPG: Exceptional Energy for Bangladesh” Available: 

https://www.wlpga.org/wpcontent/uploads/2015/09/Bangladesh_Renzo_Bee_Totalgaz.

pdf       Accessed 21 April 2021. 

Chowdhury I. 2016 “Market Insight: LPG Industry in Bangladesh” Available: 

https://www.lightcastlebd.com/insights/2016/08/04/market-insight-lpg-industry-in-

bangladesh  Accessed 15 July 2020. 

Chowdhury I. 2018 “LPG is the fuel for tomorrow's Bangladesh” Financial Express 

December 11, 2018  Available: http://today.thefinancialexpress.com.bd/26th-

anniversary-issue-3/lpg-is-the-fuel-for-tomorrows-bangladesh-1544433680 (Accessed  

15 May  2021. 

EduGreen (2019) “LPG-Liquefied petroleum gas” Available: 

http://edugreen.teri.res.in/explore/n_renew/LPG.htm  Accessed Date 10 April 2021. 

Engineering ToolBox  “Fuel Gases Heating Values: Fuel gases combustion and heating 

values - acetylene, blast furnace gas, ethane, biogas and more - Gross and Net values"  

Available: https://www.engineeringtoolbox.com/heating-values-fuel-gases-d_823.html  

Accessed 15 June 2020. 

Energy Scenario Bangladesh:  2017-18 (2019), Hydrocarbon Unit Energy and Mineral 

Resources Division Ministry of Power, Energy and Mineral Resources 

Hahn E.  (2019) “LPG Gas Blog” Available: http://www.elgas.com.au/blog/1969-how-much-

pressure-is-in-LPG-propane-cylinders-in-what-state  Accessed 11. April 2021. 

Habib, W. B., & Molla, M. A.-M. (2019). LPG growing in demand; But the industry faces a 

number of challenges. The Daily star. Retrieved from 

https://www.thedailystar.net/supplements/news/lpg-growing-demand-1846648 

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