LPG price to be re-adjusted every month from April

The price of Liquefied Petroleum Gas (LPG) should be re-adjusted every month as per Bangladesh Energy Regulatory Commission (BERC) directives from this  month, sources told the Daily Observer on Saturday.
BERC will announce a formula on fixing the retail price of LPG in domestic market tomorrow (Monday) through a virtual meeting with some directives and observations.
The BERC Technical Evaluation Committee (TEC) recommended fixing price of a 12-kg LPG container of private company at Tk 954 as the highest and Tk 758 as the lowest against the current price of Tk 1,259. However, the price of state-owned company's 12.5 kg container is Tk 902 where the government gives a subsidy of Tk 300.
"Unfortunately, BERC ignored to introduction subsidy worth 25 per cent on the import price of LPG to the operators to keep the cost of the cooking fuel within the reach of commoners, although government is paying huge subsidy in power and energy sector for ages," an official said.
TEC has also suggested introduction of a pricing formula to fix the LP gas price in domestic market in line with the international market.
Meanwhile, BERC concluded its historic maiden public hearing on fixing retail      price of LPG in domestic market on Thursday seeking more participation or submission from all quarters by January 21.
"To make an even playing field across the country, TEC said the retail price of LPG would be based on the import parity price (IPP) + bottling and storage charges + distribution charges + dealers' margin and VAT. The price of Auto Gas would follow the IPP + bulk transportation cost + station Charges + VAT + storages and bottling charges," the technical committee said.
It also said IPP means that the Saudi Contract Price (Saudi CP) + premium charges + freight cost of LPG.
Meanwhile, a committee headed by BERC member Md Maqbul-E-Elahi Chowdhury has prepared the report after consultations with stakeholders including investors.
BERC also ignore the 'carrier' issue in importing LPG from abroad, India imports LPG through bulk carriers but Bangladesh imports the fuel through small carriers.
Although the report said, "International price of the fuel including its freights, premium rates, bank interest rates, cylinder costs and different tax measures are not the issues here. The private sector imports LPG through small cargoes having the capacity of around 2,500 to 5,000 tonnes. The price of LPG in West Bengal of India is cheaper by around US$60 per tonne compared to Bangladesh only due to the cost difference of transportation."
Bangladesh's LPG market is import-dominated, as more than 95 per cent of total LPG requirement and 60 per cent of LPG cylinders are met through import. Some 26 LPG companies are now dominating the unlimited market of over 1.0 million tonnes of LPG each year.
"To ensure a unified LPG price at the retail level and reduce sufferings of the commoners, BERC has taken up the initiative to fix the retail price of LPG through a pricing policy like natural gas and electricity as per High Court order," a senior official of the Commission said on Saturday preferring anonymity.
In January 14, 2021 BERC started the maiden public hearing on fixing retail price of LPG.
"As there is no LPG price monitoring system or existence of energy pricing policy to discuss the issue we need to introduce it here but we have to understand the issue first," a BERC official said.
The official said BERC technical committee has identified that inflated transportation cost is the main barrier to lowering of LPG price in the local market.
There are two types of  markets (a) free market (b) controlled market, we should not compare our market with India as the LPG market was flourished by the public sector and the [Indian]government has been paying huge subsidy and [put in place] a monitoring system there to ensure minimum control over it, he added.
"As it is a private players market we have to ensure some profit margin for the private sector here, government should track whether they are over pricing it or not and control the quality and safety of this commodity at any cost," he said.
Meanwhile, LPG Operators Association of Bangladesh, or LOAB, in its proposal to the BERC has sought a 9.0 per cent profit in LPG sales taking into consideration the international price of the fuel including its freight, premium rate, bank interest rate, cylinder cost and different tax measures. They are selling a 12.5 kg cylinder at a rate of Tk 900 to Tk 1,000. The State-run LP Gas Ltd has sought a 16.66 per cent hike in its LPG price to Tk 700 per 12.5 kg cylinder from existing Tk 600.
It also showed that Bangladesh annually consumes about 10 lakh tonnes of LPG and about 98 per cent of it sold in bottles by two dozen private companies and only two per cent is sold by the government.
Approximately 2 million domestic consumers use natural gas mainly for household cooking. The gas utility companies estimate that approximately 7 per cent of the total population of the country gets the privilege of getting piped gas supply for everyday cooking. The rest 93 per cent are using either costlier bottled LPG gas, or kerosene or firewood.