LPG: Cylinder gas shortage unlikely to ease soon

The shortage of liquefied petroleum gas (LPG), widely used as a cooking fuel, is unlikely to be resolved in the near future. Although initiatives were taken to boost supply ahead of the holy month of Ramadan, traders have failed to import LPG in line with their commitments. Instead, imports have declined by 21,000 tonnes within a month.

Data from the Bangladesh Energy Regulatory Commission (BERC) show that 126,000 tonnes of LPG were imported in December. To stabilise supply, imports of 167,600 tonnes had been planned for January. In reality, only 105,000 tonnes were imported. Imports may rise slightly in February, but importers say normal supply may not resume until March.

Sector insiders say the government has offered various incentives to encourage higher imports, including easing the opening of letters of credit (LCs). Import approvals were also granted as per demand, and BERC adjusted prices to account for higher shipping costs.

Despite this, not all companies were able to import LPG. Some failed to open LCs, while others, despite being willing to import at higher prices, were unable to source LPG from the global spot market.

At the same time, volatility in Middle Eastern markets has complicated procurement, forcing traders to look for alternative sources.

Abu Sayed Raza, chief marketing officer of Fresh LP Gas, a concern of the Meghna Group of Industries (MGI) and one of the country’s leading LPG importers, told Prothom Alo that Fresh continues to import LPG despite higher global prices.

He expressed hope that the situation could normalise by March.

However, a member of LOAB (the LPG importers’ association), speaking on condition of anonymity, said that last month the Energy Division suddenly allowed the Bangladesh Petroleum Corporation (BPC) to import LPG, with plans to supply it to private companies. As a result, some private traders scaled back their own import efforts. BPC, however, is yet to begin imports, raising doubts about its capacity to do so effectively.

Sources within BPC say the corporation received government approval to import LPG at the state level about two weeks ago in an effort to resolve the crisis quickly. Letters have already been sent to 11 countries, and a shortlist will be prepared based on their interest and capacity. Price negotiations will follow, meaning imports will still take additional time.

According to data from BERC and LOAB, 23 companies in Bangladesh are capable of importing LPG. Last year, however, only 17 companies actually did so, and some were unable to import towards the end of the year.

Overall, the bulk of LPG imports was handled by just five companies. Although these firms sought permission to increase imports, approvals were not granted in time. As a result, LPG imports in November fell by 44 per cent compared with the same month the previous year, leading to a severe supply shortfall. From mid-December, the country began experiencing an acute LPG crisis.

Azam J. Chowdhury, director of Omera, another leading LPG importer, and former president of LOAB, told Prothom Alo that global demand for LPG has risen sharply, preventing many companies from importing.

He said it may take one to two months for the situation to stabilise.

Meanwhile, amid the ongoing shortage, BERC has announced new LPG prices for February. In a statement issued on Monday, the commission said the VAT-inclusive price of private-sector LPG for February has been set at Tk 113.04 per kilogram, fixing the price of a 12kg cylinder at Tk 1,356. In reality, LPG is not available at this price in the market.

BERC chairman Jalal Ahmed said the commission announces prices in accordance with the law, noting that fixed prices make it easier to identify overcharging.

Regarding the failure to import LPG in promised quantities, he said companies would be asked to explain the reasons.

More than 10 million consumers across the country use LPG. At present, retailers are charging Tk 800 to Tk 1,000 more per 12kg cylinder than the official price.

Sahana Sattar, a resident of Dakkhin Paikpara in Mirpur, Dhaka, told Prothom Alo that LPG is unavailable anywhere at government-set prices. She said she bought a 12kg cylinder for Tk 2,300 on Monday.