The Bangladesh Energy Regulatory Commission (BERC) is going to fix the price of Liquefied Petroleum Gas (LPG) at the consumer level to prevent anarchy in market price for the first time.
The pricing formula is almost final. Prices may be announced at the end of this month so that it can be implemented from April 1. However, it may change again every month in accordance with the international market, according to BERC.
An official of BERC said, ‘Our work has almost been done to fix the LPG price. Now we are waiting for a high-level opinion. An announcement will be made as soon as we get the approval.’
On January 14, the BERC held a public hearing on the prices of the selling companies to determine the price of LP gas. According to the rules of BERC, announcement of the new price will be made within 90 days of the hearing. As such, the time is coming to an end on April 14. But the BERC may make the announcement earlier, the source said.
According to BERC, the price of LPG in the country is usually determined according to the Saudi CP (contract price). It will be the same again. However, it will be controlled by BERC. Currently, the LPG price is being fixed by the companies considering LC margin with Saudi Arabian LPG market price, ship freight on import, multi-step transportation cost within the country, dealer dividend, entrepreneur profit.
The new formula of the commission will keep all fixed in determining the monthly price except for Saudi CP and VAT.
Earlier, in the public hearing, the evaluation committee formed by the commission had recommended a uniform price of LPG at Tk 72 per kg for public and private companies. As a result, the price of 12.5 kg LPG of government companies would be taka 902, and that of private companies would be taka 866 for 12 kg cylinder.
State-owned company had proposed to the commission to increase it from taka 600 to taka 700. However, the evaluation committee recommended that the price of their cylinders be increased by another Tk 200 to Tk 902 and that of private companies be reduced from Tk 1,269 to Tk 866.
Around 98 percent of the LPG used in the country is import dependent. The market share of the government (Bangladesh LP Gas Company Limited) is only 1.5 percent. There are currently 28 LPG operators in the country with the capacity to provide two million tonnes of gas annually, against a demand for one million tonne.
At the import stage, each company is importing from different markets. Some are brought under long-term contracts, some from the spot market (open market). In this way, the price is being fluctuated at the import stage.
The government is discouraging natural gas connections or supply in pipelines in the sector due to the gas crisis. LPG is recommended as an alternative to ensuring fuel safety.
LPG is a mixture of propane and butane that becomes liquid under pressure, which can then be stored in pressurized containers for use. It is used for heating, cooking and auto fuel. LPG is relatively new in Bangladesh, but the demand is increasing day by day.
Consumers say that sellers demand prices as per wish due to prices not being written on the bottle. The price goes up in different situations. Many cylinders contain less quantity of LPG than mentioned. There is also a risk of accidents as many cylinders are not being stored properly.
In addition to residential purposes, various other uses of LPG have been started. Meanwhile, auto gas has been introduced in the country, which is mainly used as fuel for transportation. Auto gas can be found at lower prices than those of petrol and compressed natural gas (CNG). LPG is also being used in commercial kitchens.
According to sources, 10 lakh tonnes of LPG gas may be required every year. Current demand is around 5 lakh tonnes. But the supply is 200,000 tonnes. Of this, a maximum of 20,000 tonnes is being supplied by state-owned BPC. Private companies are supplying 2 lakh tonnes.
Meanwhile, 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.
