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Thursday, April 17th, 2014 - 10:30 AM
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BIG problem for small businesses

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Life without LPG is possible, economists say, by a switch to electricity 

Industrial Gas Cylinders: One table of the nine in Tulsi Ram’s restaurant at the Zangdopelri complex in Thimphu had customers at around noon yesterday.

The smell of freshly fried fish wafted from one end of the small restaurant, where Tulsi Ram, wearing a dirty blue apron, prepared fried rice in his crammed kitchen.  A helper prepared tea and fried chopped beef, while his wife and two others prepared the plates.  All the four burners of the two cooking stoves were on.

Tulsi’s large hands quickly turned off the burner, as soon as the order was ready.  Below the ledge, on which the two cooking stoves sat, were four BIG white gas cylinders, looking a little out of place in a kitchen that wore the stains and aroma of everyday cooking.

“You can’t afford to waste even a bit,” Tulsi Ram said, pointing to the white cylinders. “It’s just too expensive.”

Ever since commercial outlets in the capital were compelled to switch to the BIG (Bhutan Industrial Gas) cylinders in November last year, small restaurants and eateries have been at their wits end on how to adjust to the sudden increase in costs and still stay in business.  The BIG cylinders are priced at commercial rates (as in India), as opposed to the subsidised quota gas meant for domestic use, which were in use so far.

The new cylinder last two days longer, but the threefold price increase is the most common complaint.

This has substantially jacked up running expenses, some say, they are even running into losses.  On an average, restaurants require five BIG cylinders a month, the price for which works out to Nu 10,105.  Initially, they required seven of the smaller subsidised cylinders a month, which cost Nu 3,430.

Therefore, monthly expenditure just on gas has increased by Nu 6,675.

Many said it might be better to close business and start another.  One restaurant in Zangdopelri is contemplating starting a garment shop.  Another has increased menu prices by at least Nu 5 a dish.  Some customers say the servings have gotten smaller, and stuffing in momos is more onion than meat.

Is there a way out for small restaurants and eateries, where a slight escalation can kill the business?  Yes, according to some economists.

They can switch to electricity, which is estimated to be four times cheaper than commercial cooking gas, according to extensive research done by an economist. (See graph).

According to the research, a kilogram of LPG is equivalent to 13.8 units of electricity.  The 19kg of gas in a BIG cylinder is therefore equivalent to 262 units of electrical energy.

For less than 100 units used, Bhutan Power corporation charges Nu 0.85 a unit; above 100 units, it’s 1.62 a unit.

So, 100 units cost Nu 85, and the additional 162 units calculated on the next slab (1.62 a unit) is Nu 264.  This adds up to Nu 349.

Which means that, for the same amount of energy used in terms of electricity, the price is only Nu 349, whereas it would be Nu 2,021 for the amount of commercial gas.

A few restaurant owners are already contemplating the switch.  For instance, a restaurant owner in Zangdopelri complex has installed a geyser to heat water, for which he initially used LPG.  According to another calculation, heating water with geysers for three hours costs Nu 5.

Another hotelier said that he was looking for reliable and efficient electric cookers, so that he can switch to electricity for cooking. “With LPG, there’s no future for us,” he said.

But some hotel owners are also doubtful whether electric cookers will be as efficient and fast as gas. “Customers demand fresh food, and I’m not sure if we can deliver that with electric cookers,” a restaurant owner said.

Electric cookers are widely used in the eastern parts of the country, where cooking gas supply is erratic.

A corporate employee, who lives alone, said the only thing to be more cautious about is the safety issue. “Otherwise, I cook everything on electric stoves, and it doesn’t make any difference in terms of taste and timing,” he said.

Some electric cookers also come with a regulator, where heat can be regulated to medium, low and high.

According to the government, the shift towards electricity will entail cost, as export of electricity to India would decrease.  But on balance, the economy might well save, by importing less LPG.

“We’ll have to look at which one will have more or less benefit to the economy, and act accordingly,” Dasho Yeshey Wangdi of the department of hydropower systems said.

The government introduced commercial gas cylinders to streamline supply for domestic and commercial uses. With both households and commercial entities using subsidized gas cylinders, its supply has choked especially in the western region.

Moreover, Bhutan has a quota of 700 metric tones of LPG supply from India every month. Of this 500MT goes to the western region while 100MT each is set aside for consumption in central and eastern region.

By Nidup Gyeltshen

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