Liquefied petroleum gas (LPG) is most commonly used for domestic cooking. This month, the price of a 12 kg cylinder is fixed at Tk 1,284. However, consumers have to purchase it for Tk 1,600. The Bangladesh Energy Regulatory Commission (BERC), the regulatory body for the energy sector, has failed to enforce the fixed price for almost two and a half years.
Roshan Ara, a resident of Shewrapara in Mirpur in the capital city, stated that she purchased a 12 kg LPG cylinder on Sunday, 10 September, spending Tk1600, which includes the cost of delivery to her home. Despite displaying the government's price list, it was of no avail. Roshan Ara expressed, "This is not the first time; we have to buy cylinders at an increased price every month."
BERC announced new prices for LPG cylinders on 3 September. Distributors in the LPG sector have indicated that if you exclude the distributor's 50 taka and the retailer's 45 taka, the wholesale price for a 12 kg cylinder should be 1,189 taka. However, companies are currently selling them for prices ranging from Tk 1280-1320. After adding transportation costs and profits, they must sell the cylinders for Tk 1350-1400.
Salim Khan, President of the LPG Cylinder Distributors Association nationwide, informed Prothom Alo that selling LPG cylinders to consumers at fixed prices is not feasible. This is because these cylinders have to be purchased from the company at a price higher than the retail price set by the government. According to him, the price should be determined through coordination between the company and the distributors.
LPG sector serves as evidence that many traders in the country do not adhere to the established rules. To foster market competitiveness, BERC has the option to grant new licenses to companies willing to sell LPG at the government-fixed prices
On 4 September, Madina restaurant purchased 45 kg LPG cylinders from MS Traders in Khalpar area of Sector 12 of Uttara in the capital. The price paid was Tk 5,100, whereas the government-set price is Tk 4,815.
MAH Akash, speaking on behalf of MS Traders, explained to Prothom Alo over the phone, "It costs us Tk 4,900 for each cylinder of LPG that includes the price the dealer charged and transportation expenses. Therefore, we have to charge an additional 200 taka."
When price of USD is the excuse
Officials from the LPG companies have also acknowledged that they are selling cylinders at inflated prices. They explained that the global LPG price is currently manageable. However, acquiring US dollars at the rate of 118 taka to open a letter of credit in the country has become challenging, as dollars are often unavailable. Consequently, they are compelled to reduce their imports. BERC adjusts LPG prices on a monthly basis, but the fluctuating dollar rate causes fluctuations in the wholesale price of LPG.
Zakaria Jalal, the Head of the LP Gas Division at Bashundhara Group, the country's leading LPG company, shared with Prothom Alo that nobody wishes to decrease imports, but due to the difficulties in opening LCs, imports have decreased by 30 per cent. The value of the dollar is constantly changing, making it challenging to maintain stable prices.
In response to this, BERC Chairman Nurul Amin stated that the excuse of the rising dollar price is not valid. There is an ample supply of LPG in the market, and opportunistic traders are capitalising on the situation to make extra profits by claiming a crisis.
He emphasised that penalties are being regularly enforced.
Increased price outside Dhaka
LPG is being sold at higher prices outside Dhaka too. In Shahjalal Trading of Hillview area in Chattogram city on Tuesday afternoon, each 12 kg cylinder was sold for 1480 taka, which is 196 taka more than the government-set price. Maruf Sohail, the company's owner, explained that they are forced to purchase the cylinders from the distributor at a higher price.
In Barisal city, each 12 kg cylinder is being sold for Tk 1,400-1,500. Mahtab Hossain, a businessman in the Battala market, mentioned that they have to procure each cylinder from distributors for Tk 1,400-1,450.
In the shops of Dattabari and Kalitala areas in Bogura, each cylinder is being sold with an additional charge of up to Tk 200 compared to the government-set price.
Traders don’t comply with rules
Regarding the "excuse" of the dollar price, BERC officials have clarified that the dollar price is being calculated based on average rate of LC rather than the rate set by the Bangladesh Bank. However, LPG cylinders continue to be sold at higher prices using various pretexts. BERC is actively conducting operations to curb this practice and has issued show-cause notices to four companies.
M Shamsul Alam, Senior Vice President of the Consumers Association of Bangladesh (CAB), pointed out that the LPG sector serves as evidence that many traders in the country do not adhere to the established rules. To foster market competitiveness, BERC has the option to grant new licenses to companies willing to sell LPG at the government-fixed prices.
* The report, originally published in the print and online editions of Prothom Alo, has been rewritten in English by Farjana Liakat