LPG shortage persists in market, prices remain high

The supply shortage of liquefied petroleum gas (LPG) has not eased in the market despite a price adjustment. Distributors say only six companies are supplying LPG regularly, but even they are unable to provide enough to meet demand. The price of the most widely used 12kg LPG cylinder is still Tk 500–600 higher than the official price in the market.

The Bangladesh Energy Regulatory Commission (BERC) announced new LPG prices on 4 October. The commission adjusts prices every month. Last month, the official price of a 12kg cylinder was Tk 1,585. For October, it set the maximum retail price at Tk 1,837. However, LPG cylinders are currently being sold in the market for Tk 2,300–2,500.

The LPG Gas Traders Welfare Association sent a letter to BERC on 6 October regarding the sale of LPG at higher prices. The letter said LPG companies issued new price lists from the evening of the day BERC announced the new price.

They set the price of a 12kg cylinder at Tk 1,740–2,000. The association also said it was not possible to sell LPG at the official price because of higher fuel costs, licence fees and other expenses.

In the letter, the LPG Gas Traders Welfare Association said the cost of transporting each cylinder from the company to a distributor’s warehouse is Tk 50. Loading and unloading cylinders from trucks and delivering them to retailers costs another Tk 35.

An additional Tk 25 is required for employee salaries, warehouse rent, electricity bills, licence fees and other expenses. The distributors want a profit of Tk 40 per cylinder.

This means they need Tk 150 per cylinder at the distributor level. They have been receiving a commission of only Tk 50 for the past five years, leaving a shortfall of Tk 100 per cylinder. Meanwhile, differences in prices among companies have created instability in the market.

The association’s letter requested necessary measures to protect the legitimate interests of traders as well as consumers in view of the ongoing instability. The letter, signed by association president Selim Khan, was also sent to the Ministry of Power, Energy and Mineral Resources, the Ministry of Commerce, the Directorate of National Consumer Rights Protection and the offices of the district commissioners.

BERC, however, says its prescribed wholesale price is Tk 1,742. Distributors receive a commission of Tk 50 per cylinder and are supposed to sell it to retailers for Tk 1,792.

BERC Chairman Jalal Ahmed told Prothom Alo that the commission had received the LPG traders’ association’s letter. However, there is no scope to adjust these costs without a public hearing. The commission will discuss the association’s proposals at its meeting next Sunday and decide what action to take. Until a new decision is made, discussions will be held with traders to ensure they sell LPG at the prescribed price.

BERC has been setting LPG prices since April 2021. At that time, the commission for distributors was set at Tk 50 per cylinder. Distributors are now demanding an increase. However, there have been complaints that LPG is not sold at the official price in the market. Prices often rise sharply in the name of supply shortages. Even after paying higher prices, consumers sometimes cannot obtain LPG.

Tamanna Akhter, a resident of Shewrapara in Mirpur, told Prothom Alo yesterday, Thursday, that a 12kg cylinder was delivered to her home the previous Wednesday and she was charged Tk 2,500—Tk 663 more than the government-set price.

Nearly 10 million customers use LPG in Bangladesh. About 80 per cent of it is used for household cooking. Demand for LPG began rising sharply after residential gas connections were halted in 2015. Annual LPG demand now exceeds 1.5 million tonnes.

About 99 per cent of the sector is privately operated, with private companies importing and supplying LPG. Besides cooking, LPG is also used in industry and transportation. LPG filling stations for vehicles are also unable to obtain enough LPG to meet demand.

Hasin Parvez, secretary general of the LPG Filling Station Owners Association, told Prothom Alo that a station that requires 30 tonnes a month is receiving only 5–6 tonnes. The stations are facing losses because they cannot sell enough.

LOAB, an organisation of businesses involved in LPG imports and supply, said 158,000 metric tonnes of LPG were imported in August. Another 156,000 tonnes were imported in September. This indicates that imports remain normal, the organisation said. It may take some more time for supply to increase.

LPG distributors say some companies began reducing supplies from 20 September. Meghna Fresh, Omera, iGas, Jamuna, Petromax and BM are mainly supplying LPG to the market. They are selling at prices set by BERC. Several other companies are occasionally supplying very small quantities, but charging higher prices. Some companies have issued price lists showing prices of Tk 1,960–2,000 even though they are not supplying LPG.

The cost of doing business is rising further because distributors are unable to obtain LPG according to demand. They would incur a loss of Tk 150 per cylinder if they sold LPG at the prescribed price.

They say they are therefore being forced to sell at higher prices. At the same time, authorities are conducting drives and imposing fines. The distributors are also considering halting LPG sales if BERC does not accept their demands.

The Directorate of National Consumer Rights Protection is conducting nationwide drives to prevent the sale of LPG at inflated prices. Its director Atia Sultana said the agency conducted 242 drives across the country between 2 September and 6 October to monitor the sale of cylinder gas.

A total of 478 distributors and retailers were penalised during the drives. The consumer rights agency fined these establishments a total of Tk 1.125 million. The drives also continued over the past two days.