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New LNG price likely before Ramadan

Published : 08 Apr 2021 09:13 PM | Updated : 09 Apr 2021 12:31 AM

A new price of Liquefied Petroleum Gas (LPG) is expected to be fixed and announced on April 12, said officials of the Bangladesh Energy Regulatory Commission (BERC).

The measure to regulate the price of LPG is being taken to prevent any anarchy in the consumer retail market, the officials said. The announcement for a fresh price tag on LPG at the retail level is also necessary after discussions with all the stakeholders engaged in the LPG business. It is mandatory to announce the agreed new price tag on LPG within 90 days of ending the meeting.

The last such public announcement by BERC was held on January 14 and April 14 is the last date before determining and announcing a fresh price tag on LPG.

Prices of LPG fluctuates in the domestic market as it also fluctuates in the international market. Whenever it is necessary to fix a fresh price the evaluation committee meets to discuss the proposed price hike with all the stakeholders and make a fresh public announcement based on the agreed prices.

An official of BERC said, “According to the law, the price must be announced within 90 days after the public hearing (meeting of all the stakeholders engaged in LPG business). We have arranged everything following the law. We are now waiting for the decision of the top authorities.”

“Since April 14 is a public holiday to celebrate the ‘Bangla new year,’ and the holy month of Ramadan starts from the very next day, so, we expect the announcement to be made on April 12,” he added. 

There is various speculation on the new price tag on LPG and when would it be effective. Officials concerned refused to disclose the new price tag before it is officially announced.

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, the price will be controlled by BERC. 

Currently, 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 and 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. 

The state-owned company had proposed to the commission to increase it from taka 600 to taka 700 per cylinder. However, the evaluation committee recommended that the price of their cylinders be increased by another Tk 200 to fix it at Tk 902 per cylinder and that of private companies be reduced from Tk 1,269 to Tk 866 per cylinder. 

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 tonnes.

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 fluctuating 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 for use in motor vehicles. LPG is relatively new in Bangladesh, but the demand is increasing day by day.

Consumers say that retailers demand prices as per their wish due to a lack of strict regulation and also lack of proper display of price tag on the cylinders. 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, LPG has been introduced in the country for vehicles, which is mainly used as fuel for transportation. Autogas can be found at lower prices than petrol and compressed natural gas (CNG).