Consumers in for worsening LPG woes
The Bangladesh Energy Regulatory Commission (BERC) yesterday raised the price of liquefied petroleum gas cylinders by nearly 29 percent, as a sharp surge in global benchmark prices and import costs for suppliers amid the ongoing US-Israel war on Iran.
According to the new price, a 12kg LPG cylinder, the most widely used size in Bangladesh, will now cost Tk 1,728.
For all latest news, follow The Daily Star's Google News channel. The retail price has increased by Tk 387 per cylinder, marking one of the largest single-month increases since BERC began setting LPG prices in April 2021 as the average benchmark prices of LPG raw materials in the global market rose by nearly 45 percent within a month -- an unusually steep increase in recent history.
In addition, higher freight and shipment-related premiums further raised the cost of imports, contributing to the sharp spike in local retail prices.
People are already paying between Tk 1,900 and Tk 2,100 for a cylinder since late March
Under the revised pricing, the commission has set LPG at Tk 144 per kg and the cylinder prices across different sizes -- from 5.5kg to 45kg, will range between Tk 792 and Tk 6,482.
The auto gas price -- LPG used in vehicles -- has been set at Tk 79.77 per litre, which was Tk 61.83 per litre last month.
Though the 12kg cylinder’s regulated price stood at Tk 1,341 in March, consumers had to pay between Tk 1,600 and Tk 1,800 across the market for much of the month.
Towards late March, the price started rising again, and even before the regulator’s latest decision, traders were reportedly selling cylinders at between Tk 1,900 and Tk 2,100 in some cases.
During a stakeholder meeting with the regulator prior to the price announcement, traders submitted a note of dissent, saying the pricing structure was “unrealistic” as they expected more hike in local prices, according to the officials.
Traders argued they had been paying higher freight charges since early March compared to the cost components considered in the April price calculation.
Asked about the issue, BERC Chairman Jalal Ahmed said the LPG market experienced supply chain disruptions throughout March, which affected overall market dynamics.
The regulator determines LPG prices based on several key indicators, including the Saudi contract price (CP), exchange rate movements and other related cost components.
The Saudi CP is a publicly available benchmark that importers can access, meaning companies are generally aware of international price movements beforehand, which is how they increased the prices, he added.
Following the BERC set prices is mandatory, Jalal said, adding that they will request the government to use district administrations to intensify oversight of the LPG supply chain.
Bangladesh’s monthly LPG consumption generally ranges between 120,000 and 150,000 tonnes, and the country relies heavily on imports.
Data from the National Board of Revenue shows that private importers have been able to import around 186,000 tonnes of LPG for the April supply.
The current import premium of $120 determined by BERC does not reflect the actual market situation, said Tanzeem Chowdhury, chief executive officer of Omera Petroleum.
The import premium has surged to between $300 and $350 since the Iran war, which most LPG suppliers are now facing.
He also pointed out that the government itself had estimated an import premium of about $165 when the Bangladesh Petroleum Corporation planned to import LPG.
Given this, he questioned the rationale behind the BERC’s reference of the $120 import premium, saying such a price could lead to unsustainable losses for suppliers.
Tanveer Ahmed Mostafa, director of Meghna Group of Industries, said the company has always prioritised national energy security and the affordability of essential commodities.
Global LPG benchmarks and freight premiums, particularly due to ongoing geopolitical disruptions, have significantly increased procurement costs.
“We believe that through strategic procurement and a collaborative regulatory approach, we can serve the market responsibly while ensuring the sector’s long-term sustainability,” he added.
The LPG supply crunch began in November last year and continued until February, partly due to the absence of several major importers from the market and shifts among emerging suppliers, according to industry players.
“The government’s pricing is unrealistic as the international prices have gone up much higher,” said Mohammed Amirul Haque, president of the LPG Operators Association of Bangladesh.
Although most of the importers follow the fixed rate, the prices increase basically in the retail level.
“It’s beyond our control,” he said, while calling for the involvement of law enforcers and the Directorate of National Consumers’ Right Protection.
The BERC chairman said they are considering monitoring a few companies on a trial basis to verify the importers’ claims.
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