Govt fixes private LPG price for the first time

Highlights

• State-owned 12.5kg LPG cylinder price set at Tk591
• Private 12kg cylinder price at Tk975
• Per litter auto gas price at Tk47.92

The government for the first time has taken the pricing authority of Liquefied Petroleum Gas (LPG) marketed by private companies in its hand by re-fixing its price at the retail level.

The Bangladesh Energy Regulatory Commission (Berc), the energy pricing and licensing regulatory of the country, announced the first-ever LPG pricing order on Monday at a virtual press briefing.

LPG distributors have largely controlled its price by far, while the Bangladesh Petroleum Corporation (BPC) was responsible for the portion owned by the state.

According to the order, per 12kg LPG cylinder will cost Tk975, which is now being sold at Tk1000 to Tk1100, depending on companies.

Meanwhile, the retail price of the state-owned LP Gas Limited's 12.5kg cylinder will cost Tk591, instead of the existing price of Tk600.

"The order has been prepared based on information found in the public hearing and other data provided by the operators. The price will be adjusted every month based on the Saudi Contract Price (CP) of Propane and Butane, the raw materials for the cooking gas," said Berc Chairman Md Abdul Jalil while announcing the order.

In a response to a question, the Berc chairman further added that legal actions will be taken against those who try to sell at prices higher than the stipulated prices.

However, the LPG Operators Association of Bangladesh (LOAB) rejected the order claiming that their opinion and demand have not been reflected in the order.

"We always wanted an integrated and combined LPG pricing. But Berc's LPG pricing announcement is an arbitrary decision, which is not acceptable to us," said Azam J Chowdhury, president of the LOAB.

"Many areas of operating costs have not been considered in the order. Therefore, we have decided to write to Berc to revise the order to address the gaps," he added.

Earlier, the energy regulatory commission held a public hearing on 14 January. Following a directive of the High Court, the Berc initiated to take the price adjustment charge in its hand. The directive came after a writ petition filed by the Consumer Association of Bangladesh (CAB), which asked the court to ensure consumer rights by fixing a unique LPG price.

Alongside the private investors, the CAB also differed with Berc on its order on different grounds. 

CAB's energy advisor Dr Shamsul Alam said the price order failed to ensure consumer rights.

"The price of government-owned LPG which is being consumed by a specific group is lower. General consumers do not get that LPG. Berc should have lowered the private LPG price more, keeping an option of subsidy to ensure affordable gas for general consumers," he added. 

But the Berc chairman said, "Providing subsidies or not is totally a government's decision."

Berc fixed the LPG price for private distributors, considering the CP as the principle of pricing. CP is the pricing rate of propane and butane, the two major elements of LPG.

Saudi Aramco CP price was at $625 per tonne of propane and $595 per tonne of butane in the last month.

However, in the latest price order, Berc considered the average CP price at $616 per tonne and the remaining part of the price includes ships and traders' premium, import parity, storage and bottling charges, VAT, distribution and retailer charges.

Private distributors opined that the pricing order will damage the LPG industry as many areas of operational costs have not been addressed in the order.

In the order, the retail price of 25kg LPG cylinder was fixed at Tk2,032, 30kg cylinder at Tk2440, 35kg cylinder at Tk2846 and 45kg at Tk3,659.