LPG costlier in Bangladesh than in India

September 14, 2021

Says CAB at public hearing
The price of liquefied petroleum gas (LPG) in Bangladesh is higher than the price in India, so the operators’ demand for a higher price does not hold water, said the Consumers’ Association of Bangladesh (CAB) yesterday.
Earlier in April, the Bangladesh Energy Regulatory Commission (BERC) had for the first time fixed the retail price of LPG, progressively becoming the fuel of choice for cooking and running vehicles.
Then, the BERC stipulated that a 12 kg cylinder, the most form for marketing the fuel, would sell for Tk 975 — an amount that did not go down well with the industry stakeholders.
At that time, it also said that the prices would be adjusted based on the contract prices with Saudi Arabia for propane and butane.
Since April, the BERC has revised upwards the price three times and yet the industry stakeholders, which include LPG cylinder manufacturers, bottling plant owners, importers and traders, remained dissatisfied.
They demanded a public hearing to press home their demand for an extra Tk 224 for a 12 kg LPG cylinder as the BERC’s pricing formula did not incorporate all aspects of the cost components for the sellers.
In India, the average price of a 12 kg cylinder is about Tk 875, said Shamsul Alam, energy adviser of CAB, at the hearing yesterday, which was conducted by BERC Chairman Md. Abdul Jalil.
In September, the BERC fixed the price of the 12 kg cylinder, the most common form for selling the fuel, at Tk 1,033 based on the month’s contract price with Saudi Arabia.
But the LPG Operators Association of Bangladesh (LOAB) has demanded Tk 1,372 and Beximco Tk 1,381.
The facts and proofs do not support the LOAB’s pricing demand, so the latest price of LPG should be at Tk 997 instead of Tk 1,033, Alam said.
Besides, the application to reform the pricing does not have legitimacy as the LPG operators did not apply within the month of the BERC’s fixing the price as specified, according to Alam.
“The prices were not implemented anywhere,” he said, adding that the retailers were selling LPG at least Tk 100-250 more than the price set by the BERC.
But the LPG operators said the price fixed was untenable for them.
In Bangladesh, the LPG’s market size is $2.5 billion and 27 players are in operation, said Shamsul Haque Ahmed, chief executive officer of Omera Petroleum, who presented the demands on behalf of the LOAB.
“But due to the non-methodical approach of LPG pricing by the BERC, the industry has become unhealthy.”
He went on to call for a floor and ceiling for the prices of LPG rather than a set price.
“Not only should the Saudi contract price be in the consideration when setting the price, but also components like transportation costs.”
The transportation costs would be different for every company as they do not collect the same quantity from the international market, according to Ahmed.
In 2016 and 2021, the price of LPG is near about the same, whereas the Saudi contract price has doubled, he said.
Ahmed demanded fixing the LPG price based on the Saudi CP of the same month and not on the previous month along with consideration of other issues.
The BERC pricing is affecting the small LPG providers as they are at loss with high bank loans, said Zakaria Jalal, executive director of Basundhara LPG, the market leader.
The profit is marginal under the price fixed by the BERC, as a result of foreign investors are losing interest, said Mohammed Mujibur Rahman, chief of marketing and sales at Totalgaz Bangladesh.
Ruhin Hossain Prince, central committee member of the Communist Party of Bangladesh; MM Akash, a professor of Dhaka University; Barrister Tureen Afroz; Zonayed Saki, chief coordinator of Ganasanghati Andolan; and Mohammad Sirajul Mawla, president of the Autogas Station Owners Association, spoke at the event.
The implementation of the BERC’s pricing is more important than the announcement, they said.

-With The Daily Star input

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