LPG price hike proposed

The state-owned LP Gas Company Limited and all other liquefied petroleum gas (LPG) supply operators have recently submitted a proposal to Bangladesh Energy Regulatory Commission (BERC) for hike of LPG price by 10-11 percent. 

The consumers, in the meantime, are paying higher prices to purchase LPG compared to many other countries. If the proposal is consider by BERC then the consumers will have to pay even more to buy LPG. 

BERC has taken an initiative to fix the price of LPG for the first time to avoid the contempt of court rule. To this end, the commission will hold public hearing on January 14, 16 and 17 on fixing LPG price, official said. 

Earlier, on August 25, the High Court had directed BERC to fix the price of LPG through a public hearing and submit a report within 30 days after hearing a writ petition filed by the Consumers Association of Bangladesh CAB. 

Although a long time has passed since the order was issued, the Commission has not taken any initiative to comply with the order. They did not even submit any report to the court.

On November 29, the high court issued a contempt of court rule against BERC chairman Mohammad Abdul Jalil. The High Court bench ordered to submit report on the matter within two weeks.

An official of BERC said, “We have got proposals from all operators. After evaluating it by an evaluation committee then public hearing will be held as per their recommendations.  The pricing method will be fixed based on the hearing.”

According to BERC, they received three separate proposals. One is from LP Gas Limited, the second from the LPG Operators Association of Bangladesh (LOAB) and the last one from Promita LPG.

The LOAB, a national platform of the private LPG operators, urged the regulatory body to increase the LPG price by 10-11 percent on an average from the existing retail price.

On the other hand, the LP Gas Limited, a subsidiary of the BPC, submitted a separate proposal seeking to increase the price of 12.5 kg cylinder to Tk700 from the existing Tk600.

Energy expert, Professor M Shamsul Alam said “The LPG companies cannot do it as the issue is now under the High Court's jurisdiction."

He explained, “There are state-owned companies in any sector to control the market. They will meet most of the market demand. But in our country the scenario is reverse. Not only the LPG sector in the country, in fact the entire gas sector is controlled by the traders. As a result, the capacity and marketing system of government LPG companies are not being modernized. Some officials are getting unethical benefits while the people are losing.”

“LPG traders are also controlling the issue of not providing gas connections to households. They are desperate to hold on to the LPG market. But if gas connection was given to the households, the government revenue would increase. Besides, the illegal gas users will decrease,” he added.

In the international market, the price of petroleum product has declined. For this, Bangladesh Petroleum Corporation (BPC) has reduced the price of its own produced LPG per cylinder weighing 12 liters from Tk 700 to Tk 600 at the consumer level in the country. But the price of the same weight of gas supplied by private companies may be as high as taka 1050 to 1150. There are also price differences between companies and locations. In Kolkata, the price of a 14.2 kg unsubsidised cylinder is taka 704 (Rs 621) and the subsidized cylinder is even lower. 

The government is discouraging natural gas connections or pipeline supply in the sector due to a gas crisis. LPG is recommended as an alternative to ensuring fuel safety.

However BERC has recommended a 25 percent subsidy on the import price of Liquefied Petroleum Gas (LPG) for the operators to keep uniform and affordable prices at the consumer level to prevent anarchy.

The commission thinks that consumers of pipeline gas are getting gas at a much lower price than LPG. Therefore, it is possible to collect this subsidy by imposing charges on the pipeline consumers. This will not create financial pressure on the government or the people to subsidize.

Some 212 kgs of wood is required to get the equivalent of 12 kg LPG. The use of wood is harmful for the environment. On the other hand, smoke is creating health risks. It is recommended to consider LPG as an environmentally friendly antidote for lung diseases.

According to the Energy Division, the total supply of LPG in January 2009 was 45,000 MT. At present this quantity has increased to 16-18 lakh MT. Of this, only 16,000 tons are being supplied by state-owned BPC. Private companies are supplying the rest. There are around 25 LPG operators in the market.

World LPG Association (WLPGA) sees Bangladesh as one of the fastest-growing LPG markets in the world, and predicts that demand for the fuel might reach up to 30 lakh tonnes by 2025.