LPG priced at Tk 1,200 unavailable even at Tk 1,800, who will take notice?

After his LPG ran out on the morning of 24 December, Kawsar Khan, a resident of Mohammadpur area in the capital, phoned his local neighbourhood shop. There were no LPG cylinders available.

He then called another shop, with the same result. Finally, at a third shop, he managed to get a cylinder. Kawsar Khan said, “I had to pay Tk 1,500 for a single cylinder. Such a sudden price hike is unimaginable.”

Farzana Nila, a resident of Kalyanpur New Market area, said that on 30 December she searched at cylinder shops but could not find LPG. Later, when she did manage to get a 12kg cylinder, she had to pay Tk 1,800. She paid more than Tk 500 above the fixed price.

On 31 December, Asma Akhter of Kazipara in Mirpur faced a similar ordeal while searching for a cylinder. She could not get one even at Tk 1,800. She said she eventually had to pay Tk 2,100 to buy a 12kg LPG cylinder. Yet the government-fixed price of LPG in December was Tk 1,253.

In households, the most commonly used cylinder for cooking is the 12kg LPG cylinder. For the past two weeks, LPG prices have been rising steadily. Speaking to four retail sellers in Dhaka it was found that despite placing orders, they are not receiving supplies of LPG.

As a result, sellers cannot provide cylinders despite customers’ demand. Consumers are being forced to buy at higher prices, and the retailers say they are selling at higher prices for the same reason.

Selim Khan, president of the LPG Cylinder Distributors Association across the country, was surprised at these abnormally high prices. He told Prothom Alo that most companies have halted supplies, and only a handful of them are supplying LPG.

“If we demand 1,000 cylinders, we get only 200 to 300. Trucks are going and waiting idly, increasing costs. Companies are charging an additional Tk 70 to 80 per cylinder,” he said.

However, he also said it was wrong to raise market prices before any official price hike. “There is no scope to charge Tk 500 to 800 extra. Retailers are not doing the right thing,” he added.

The Bangladesh Energy Regulatory Commission (BERC) is scheduled to announce a new price on 4 January. Sources at BERC and the LPG traders’ organisation, LPG Operators Association of Bangladesh (LOAB), say that global demand for LPG rises during winter, pushing prices up somewhat.

This year, the situation has been compounded by a shortage of ships for LPG imports. A total of 29 vessels regularly used for LPG transportation have come under US sanctions. Transport costs have increased, and ships are not readily available.

As a result, LPG imports fell last month compared with the previous month. On average, 130,000 to 140,000 tonnes of LPG are imported each month. In December, imports stood at 90,000 tonnes.

Due to higher import costs, some companies may keep prices slightly higher. LOAB vice-president and Managing Director of Energypac, Humayun Rashid, told Prothom Alo that LPG imports fell by about 40 per cent in December.

“The current situation in the market has mainly arisen due to supply shortages. Ships are not available. Even so, we are supplying LPG to distributors at BERC-fixed prices. Retailers, however, are beyond our control,” he said.

Since April 2021, BERC has been setting LPG prices on a monthly basis. However, allegations of sales at higher-than-fixed prices have always been there. Such excessive price hikes had not been seen before this time. The matter has already come to BERC’s attention.

This Thursday, BERC sent a letter to LOAB asking it to take action. The letter stated that the price of LPG for December had been fixed at Tk 104.41 per kg, meaning Tk 1,253 for a 12kg cylinder. Complaints have been received that LPG is being sold at prices higher than the fixed rate.

According to the commission’s order, no extra charge can be levied at any stage, storage and bottling, distribution, or retail sale to consumers. The letter requested that necessary steps be taken to ensure LPG is sold at the fixed price at all levels.

BERC Chairman Jalal Ahmed told Prothom Alo that LOAB had been asked to take action after reports of higher prices came to light.

“If importers’ costs increase, they can submit those to the commission. If the additional costs are verified on paper, the commission will consider them when adjusting new prices. Until then, there is no scope to sell at higher prices,” he said.

Although BERC sets the prices for LPG, it has long been criticised for failing to ensure that LPG is sold at those prices. BERC officials have repeatedly said they lack the capacity to monitor the market.

From time to time, they write to deputy commissioners requesting oversight, effectively shifting responsibility. However, consumer rights organisation Consumers Association of Bangladesh (CAB) believes BERC still has greater scope to exercise its legal authority.

Now, under the pretext of supply shortages, LPG prices have gone beyond control, placing an extra burden on consumers.

CAB energy adviser M Shamsul Alam told Prothom Alo, “Even if there is a shortage, LPG is still available at higher prices. Selling at inflated prices is a punishable offence by law, yet BERC is failing to ensure punishment.”

“Consumers are losing confidence in this institution. Neither the local administration nor any government agency is taking action against inflated prices. This cannot happen in a civilised society,” he added.