LPG prices up by 20pc amid instability in global market

The price of liquefied petroleum gas has increased by 20 percent at retail stores in the country on Sunday, around four days after the prices rose in the international market amid a looming supply shortage.

Users have been paying an additional Tk 200 per 12kg cylinder.

Yesterday, a 12kg cylinder of the Bashundhara LP Gas, widely used in households, was sold for Tk 1,200 in Dhaka and Tk 1,100 elsewhere. The company raised the price by Tk 150.

LPG prices went up in the international market on January 1. 

According to market players, the number of LPG users reached 20 million in the country last year.

In the international market, the price of each tonne rose on January 1 to $589 from $440, said Fazlur Rahman, managing director of the state-run LP Gas Limited.

“We increased the price to match that of the international market,” said Jakaria Jalal, general manager at Bashundhara LP Gas.

In Panchhari upazila of Khagrachhari, retailers charged Tk 1,100 for an 12kg cylinder yesterday, said Sugata Chakma, a household user. Prices also rose in Bandarban.

Restaurant owners in the capital said the price hike had affected them. The price of larger cylinders rose by Tk 300 to Tk 350.

LPG marketers can increase or decrease the price in line with the international market, but it should be logical, said Shamsur Rahman, chairman of the Bangladesh Petroleum Corporation. 

Local importers spend $120 for shipping of each tonne of LPG. There is 5 percent value-added tax at retail levels.

As a result, the prices should increase by no more than Tk 130 excluding VAT, Shamsur added.

In June last year, the LP Gas Limited increased the 12kg cylinder price by Tk 30 and sold it for Tk 700. But the state-run company accounts for only 2 percent of the total annual sales of 1 million tonnes.

A lot more LPG can be sold in the country, he said.

At present, 15 companies import LPG and 20 companies, including the importers, retail the refillable LPG cylinders.

LPG supply from the Middle East would be limited by lower crude oil output and gas in 2020, following the decision by the Organisation of the Petroleum Exporting Countries, Russia and its allies.

In December last year, they decided to steepen production cuts to 1.7 million barrel per day from 1.2 million, with Saudi Arabia offering an extra 400,000 barrel per day in voluntary cuts starting January.

With no sign of an end to the US sanctions, especially in light of the current tensions following the killing of Iranian General Qassem Soleimani, Iranian supplies are also expected to remain scarce, it said.

Oil companies in India have raised the price of non-subsidised LPG to Rs 714 per 14.2kg cylinder from Rs 695 previously. This is the fifth straight monthly increase in cooking gas prices since September 2019, the India Today reported on January 1.

LPG price is revised on the first day of every month based on the average international rate for benchmark fuel and foreign exchange rate in the preceding month, said an official of a multinational company operating in Bangladesh.