LPG prices high in Bangladesh

The set price for liquefied petroleum gas (LPG) used for cooking is higher in Bangladesh compared to neighbouring countries.

In Bangladesh, the set price per kg of LPG is approximately Tk 153 Taka. In Kolkata, India, it’s Tk 87. The fixed price of LPG is also lower in countries like Pakistan, Sri Lanka, and Nepal compared to Bangladesh.

In Bangladesh, the price is determined by the Bangladesh Energy Regulatory Commission (BERC). However, these prices are never implemented in the market.

For example, the fixed price for a 12-kg cylinder of gas is Tk 1,837, but in Dhaka, it is being sold at prices between Tk 2,300 and Tk 2,500.

Overall, it appears that people in Bangladesh have to buy cooking gas at a much higher price than in neighboring countries.

Both the government body BERC and the Directorate of National Consumer Rights Protection (DNCRP) have been unable to enforce even the high set prices. This issue is not new; it has been ongoing for many years.

There are approximately 10 million LPG users in the country. Among them, 80 per cent use it for household cooking purposes. The demand for LPG is now over 1.5 million tonnes per year. When LPG prices go up, the lower and middle class people struggle. Amidst high prices for electricity, fuel, and everyday commodities, the price of LPG is unrestrained.

Sazzadur Rahman, a private employee from Mirpur, Dhaka, told Prothom Alo that his family needs two cylinders (12 kg each) of LPG per month. Recently, he bought one cylinder for Tk 2,400.

He said that government agencies won't be able to enforce the fixed price, yet ordinary people will have to pay high taxes to double their salaries; that seems to be the fate.

Two types of gas are used for cooking in the country: pipeline natural gas and liquefied petroleum gas or LPG. Gas line installations in households have been halted since 2015. On the other hand, the demand for LPG is increasing.

Private companies primarily import LPG to meet the demand. Following a court order, BERC sets the price monthly. The agency has been setting the LPG prices since April 2021, aiming to provide cooking gas at affordable rates to the people.

Last Sunday, the Bangladesh Energy Regulatory Commission (BERC) announced the new LPG prices. The price for a 12-kg cylinder was set at Tk 1,837, an increase of Tk 252. Yesterday, a conversation about LPG prices took place at a retail seller’s shop in the Mohammadpur Housing Limited area. On the condition of anonymity, he said that the supply of LPG hasn’t increased. Even if they want 30 cylinders per day, they only receive 15. Each 12-kg cylinder is being sold at Tk 2,400.

According to data from the state-owned Indian oil company, IOC, each Indian state has different LPG prices. In Kolkata, the capital city of West Bengal, the retail price of a 14. 2-kg LPG cylinder is 968 Rupees. Therefore, the price per kg is 68.17 Rupees, which is Tk 87 in Bangladeshi currency. Prices are even lower in Delhi and Mumbai.

BERC Chairman Jalal Ahmed told Prothom Alo that comparing with India is challenging. In India, a government agency sells LPG, and they have more infrastructure capacity.

He said that primarily due to transport costs, the price is higher compared to other countries. There is land available at Maheshkhali’s Matarbari for the LPG company. If they set up a terminal, imports can be made with large ships. They have land in Chattogram by the Karnaphuli River, in Mongla of Bagerhat, and in Elenga of Tangail. They can create large warehouses that may take three to four years and then bring the price down like in other countries.

Meanwhile, the IOC website states that the current price has been effective since June and there is no subsidy included in these prices.

A Prothom Alo correspondent from Delhi reported that in India, there are two types of subsidies. One is that the government provides 300 Rupees per cylinder to the poor, sent as financial services through banks/mobile phones. On the other hand, the state-owned oil company IOC sometimes sells LPG cylinders to homes at a loss.

An article from the well-known Indian daily The Hindu says in September, the implicit subsidy amount on a 14. 2-kg cylinder was 210 Rupees. Calculations show that even without the subsidy, the price of a 12-kg cylinder hovers around Tk 1,300.

The website of the private company LAUGFS Gas in Sri Lanka mentions that there is some variation in LPG prices in different cities of the country. The price of a 12. 5-kg cylinder in the capital Colombo is 4,965 Rupees, equating to less than Tk 1,400 in Bangladeshi currency.

A report from the Pakistani newspaper The Dawn on 1 October stated that the Pakistan Oil and Gas Regulatory Authority increased LPG prices by 8 per cent. The price per kg was set at 279 Rupees.

After calculation, the price for a 12-kg cylinder comes to slightly less than Tk 1,500 in Bangladeshi currency.

Information from the Nepal Oil Corporation states that the price of a 14. 2-kg LPG cylinder in the country is 2,060 Rupees, which is slightly less than Tk 1,400 in Bangladeshi currency. Journalists in India, Sri Lanka, and Nepal have mentioned that LPG is roughly sold at the government-set price in these countries. In Pakistan, there are allegations of selling slightly above the set price. However, no country sells LPG at as high a price as Bangladesh.

Traders associated with LPG import and supply say that there are no terminals in the deep sea in the country. There is no capacity to store sufficient LPG. Therefore, it is imported in small ships, which incurs higher costs.

Former president of the LPG Operators Association of Bangladesh (LOAB) Azam J Chowdhury told Prothom Alo that due to infrastructural limitations and ship rental costs, Bangladesh is lagging behind in the competition. If a terminal were constructed in the deep sea and storage capacity increased, the price would also decrease in the country. He said that if the price goes up, demand goes down, so traders don’t want higher prices.

The reason for the LPG cylinder price rising to Tk 2,500 in two weeks is a decrease in supply. Conversations with LPG distributors and retailers in the market revealed that some companies started reducing supply from 20 September. Initially, the supply was reduced by 30 per cent. Later, it was gradually reduced by more than 50 per cent.

LOAB, the traders’ organisation, stated that in August, 158,000 metric tonnes of LPG was imported. The import quantity in September was 156,000 tonnes. This indicates that import levels are normal. Therefore, the organisation has warned everyone not to sell LPG at excessively high prices.

It was anticipated that the market price would stabilise following BERC’s price adjustments. According to business sources, after BERC increased the prices, the supply is now increasing. However, there is a long queue of waiting trucks, so it may take more than a week for supply to normalise.

In this regard, Azam J Chowdhury said that due to a shortage in pipeline gas supply, the demand for LPG in the industry has increased. As a result, although import is on track, residential supply has decreased. More imports are being increased. It will take a few days for supply to normalise.

The BERC chairman and traders provided various reasons for the high LPG price in Bangladesh. After talking with them, inquiries at a shop in Battola area of Barishal city revealed that the price for 12-kg cylinders of Petromax, Sun, and Fresh brands is Tk 1,870, and Total Gas is Tk 1,920. The question is, why is the price Tk 400–500 more in Dhaka?

When Sazzadur Rahman, the private employee from Mirpur, Dhaka was informed about the situation, he told Prothom Alo that the market chaos is due to the failure of governmental agencies.