Since the political changes of 2024, several companies have reduced imports of liquefied petroleum gas (LPG). Some later stopped imports altogether. However, a number of active companies repeatedly applied for permission to increase imports but did not receive government approval, leading to a supply crisis.
For the past week, consumers have been unable to obtain LPG even after paying higher prices. Industry insiders have blamed government mismanagement for the ongoing crisis, saying their requests for increased imports were not approved. They argue that the shortage would not have emerged if imports had been allowed to rise.
Sources at the LPG Operators of Bangladesh (LOAB) said that 28 companies are involved in the LPG business in the country, of which 23 have approval to import. In practice, six companies account for most LPG imports, while four others import on a limited scale. The remaining companies did not import LPG in December. Some companies are barely operating and are struggling to repay bank loans.
Industry sources said each company is assigned a fixed import quota, with no scope to import beyond that limit. As a result, even companies with sufficient capacity are unable to increase imports. Some companies are importing less than their approved allocation. Imports by a major company have fallen significantly over the past one and a half years, while several others have been unable to import LPG due to banking transaction complications.
Contacted last night, adviser to the Ministry of Power, Energy and Mineral Resources Muhammad Fouzul Kabir Khan told Prothom Alo that there is no LPG shortage and that retailers have created an artificial crisis. He said mobile courts would be conducted to normalise the situation and that BERC would allow businesses to increase imports.
No approval even after two years
Fresh LPG of the Meghna Group, a leading company, has been seeking approval from the Energy Division for nearly two years to increase imports. A responsible official of the company said it operates four plants for filling LPG cylinders. Of these, the large Meghnaghat plant has approval to import 250,000 tonnes of LPG annually, although it has the capacity to import an additional 100,000 tonnes. Besides this, the company has plants with capacities of 90,000 tonnes in Mongla and 60,000 tonnes each in Bogura and Bhaluka. Limited quantities of LPG are being imported to these three plants under preliminary approval, but the government has not granted final permission due to the absence of laboratories.
Delta LPG Limited has sought approval to increase its imports from 60,000 tonnes to 230,000 tonnes. However, in a letter sent to the company by the energy division on 12 November, it was stated that there was no scope to consider the application as it did not mention any plan to upgrade annual import or production capacity.
Energy Division sources said that under existing policy, LPG plants must have quality-testing laboratories, and approval for imports to new plants has not been granted due to the absence of such facilities. LOAB, however, said that no LPG plant in the country has a laboratory and that all companies previously received approval without one. The requirement has been strictly enforced for the past two years. LOAB also argued that there is no justification for each plant of the same company to have a separate laboratory, as establishing one costs at least Tk 30 million. Instead, they suggested shared laboratories through engineering universities to ensure impartial testing.
Only 10 of 28 companies importing
LOAB sources said that 23 companies have their own terminals for imports, but only 10 companies imported LPG in December. These were Fresh, Omera, iGas, Jamuna, Petromax, BM Energy, Total Gas, Sena Kalyan, Delta and Lafarge. Orion, Beximco, EnergyPac’s G-Gas, Navana and S Alam Group’s Unigas have been unable to import due to banking transaction issues.
LOAB sent its latest letter to the energy division on 21 August last year, urgently requesting approval to increase LPG imports. However, no action has been taken. The letter stated that following the July mass uprising, several companies simultaneously halted LPG imports, reducing market supply. It stressed the need for urgent approval to allow active companies to increase imports and ensure uninterrupted supply to consumers.
LOAB secretary general Ahsanul Jabbar told Prothom Alo that if approval had been granted in time, imports could have been increased further. He acknowledged that the current supply crisis has emerged due to several factors and said retailers are taking advantage of the situation.
Meeting between LOAB and the energy division
On Sunday afternoon, the energy division held a meeting with LOAB to address the ongoing LPG crisis. Business representatives raised issues related to LPG imports and proposed removing value-added tax at the production and import stages. The energy division proposed reducing VAT at the import stage from 15 per cent to 10 per cent.
After the meeting, joint secretary of the energy division (operations) Monir Hossain Chowdhury told reporters that global conditions and a shortage of vessels have reduced supply. He said not all operators are active and that some have reduced imports over the past one and a half years. If their approved allocations are reassigned, other companies would be able to increase imports. He added that Bangladesh Bank would be asked to prioritise opening letters of credit for LPG imports, and that further discussions would be held with the National Board of Revenue regarding VAT.
Later at night, LOAB said in a press release that higher freight charges during winter, increased energy use in Europe and other factors have disrupted supply, although current stock levels are satisfactory. The meeting discussed removing the upper limit on LPG imports. The organisation also said some retailers are selling LPG at prices higher than government-fixed rates, causing harassment to consumers and market instability, and called on the government to take action against such retailers.
An emergency meeting on the situation was also held with the energy division last Saturday by the Ministry of Power, Energy and Mineral Resources. A subsequent notice from the energy division said LPG prices at the retail level are higher than normal, despite adequate stocks. The administration has been instructed to take action against those creating artificial shortages. LPG imports increased in December compared to November, leaving no logical reason for a supply decline. It said retailers, anticipating price hikes, created the crisis. Steps have been requested from local administrations to normalise the situation, while measures have already been taken to ease LC procedures and reduce VAT.
New LPG price set at Tk 1,306
The consumer-level price of privately supplied LPG has been increased by Tk 4.42 per kg. For January, the price of a 12-kg cylinder has been set at Tk 1,306, up from Tk 1,253 last month. This represents an increase of Tk 53 per 12-kg cylinder. The new price was announced yesterday at a press conference by Bangladesh Energy Regulatory Commission chairman Jalal Ahmed and took effect from 6:00 pm.
The price of a 12.5-kg cylinder supplied by state-owned companies remains unchanged at Tk 825. The price of LPG used in vehicles, or autogas, has been set at Tk 59.80 per litre, up from Tk 57.32 last month.
The commission fixes LPG prices every month. The 12-kg cylinder is the most commonly used for household purposes. However, for the past week, retailers have been charging Tk 800 to Tk 1,000 more per cylinder.
In response to a query, the BERC chairman said businesses had stated that they were selling LPG to distributors at the fixed price at the production stage. He said the Directorate of National Consumer Rights Protection is conducting drives against overpricing at the retail level, and that action will be taken if any allegations of overpricing at the production stage are found.