With this deal, Saisan Co. will become the first foreign player in the Nepali LPG market besides Indian firms
The Nepali gas industry is seeing a new phase of development driven by the country’s energy potential, globally.
This became evident in one of the recent developments that saw a Japanese firm stepping up its efforts to enter the Nepali gas market as part of its business expansion in Asia.
Tapping on Nepal’s growing energy demand that increased aftermath of the 2015 earthquake, a Japanese LPG distributor Saisan Co. formed a joint venture with Gas One Nepal Private Ltd., thus becoming the first foreign player in the Nepali LPG market besides Indian firms.
Though firewood has been the primary source of fuel in Nepal, there is now a sharp rise in demand for LPG in the country because of its advantages such as stable supply and minimized air pollution compared to wood fuel.
While there are a total of 58 LPG suppliers in Nepal, there is hardly any city gas network even in the capital city Kathmandu.
Despite the high LPG demand among the city’s hotels and restaurants, the city’s diffusion rate is estimated to be only 20 percent leaving scope for further expansion.
Tapping Nepal’s LPG Demand
The LPG demand in Nepal has seen its new high as a result of the Nepal Government’s new economic reforms and recovery efforts aftermath the devastating 2015 earthquake that shook the country’s landscape.
The Japanese firm is keen on tapping the country’s gas demand, which it says has increased from 260,000 tons in 2016 to 300,000 tons in 2017 at an annual growth rate of 10 percent.
According to Satoki Koike, who heads the Saisan’s overseas business division, Nepal has good growth potential like any countries and is most likely to see a 500,000 tons LPG demand in the future.
“We want to provide safe and highly efficient products, so we can gain market trust,” Koike said referring to the locals’ call for safety measures as a result of recently-reported gas explosions in Nepal due to defects in LPG tanks.
The local joint venture is currently operating in the southern regions in the Indian border area and is eyeing the Kathmandu market in the near future.