The Bangladesh Energy Regulatory Commission (BERC) fixed the retail prices of liquefied petroleum gas (LPG) for domestic market on Monday, for the first time, considering the Saudi Aramco contract price (CP) of March 2021, which was the highest over several years.
Market insiders, including the Consumers Association of Bangladesh (CAB), termed declaring the new LPG tariff as a means to support the private sector.
The retail price of each 12.5-kg LPG cylinder, provided by the state-run LP Gas Ltd, will be Tk 591, while each 12-kg LPG cylinder, provided by the private operators, will be Tk 975.
BERC chairman Md Abdul Jalil announced these while delivering the LPG tariff order through an online platform from its office in Dhaka on Monday afternoon.
The commission announced the new tariff of LPG after holding a public hearing on January 14, 2021 in line with a court instruction.
LPG is being used mostly as cooking fuel, and in maximum households 12 kg or 12.5 kg LPG is being provided by the operators through cylinders.
The commission fixed the retail-level LPG price for the private sector companies at Tk 81.30 per kilogramme (kg) with value added tax (VAT).
The private sector will be able to sell LPG through different sizes of cylinders - 5.5kg, 12.5kg, 15kg, 16kg, 18kg, 20kg, 22kg, 25kg, 30kg, 35kg and 45kg - to the consumers, the BERC order stated.
Price for LPG to be supplied through reticulated system or centralised storage system will be Tk 79.01 per kg including VAT.
The price of auto gas, the LPG used in vehicles, has been fixed at Tk 47.92 per litre by the commission.
The prices have come into effect from Monday (April 12), as per the regulator's decision.
Until Sunday, LP Gas Ltd fixed and announced retail-level LPG price for its product occasionally, while the private sector's retail LPG price was fixed by the companies concerned without any public announcement.
A 12.5-kg LPG cylinder was being sold by LP Gas Ltd at Tk 600 until Sunday, according to the company statement.
The private sector was selling a 12-kg LPG cylinder at different prices across the country within the range from Tk 980 to Tk 1,100, market sources said.
Auto gas price was Tk 45 per litre, until Sunday, said Serajul Mawla, president of LPG Filling Station and Conversion Centre Association.
"The commission has fixed the price of LPG considering the Saudi Aramco CP of March 2021 for Propane and Butane, which was US$ 625 per tonne for Propane and $595 per tonne for Butane," said the BERC chairman.
The price would be adjusted every month based on the price movement of Propane and Butane in the CP, he added.
Propane and Butane are the main ingredients of LPG, which is prepared through mixture of these two components.
The commission earlier held a public hearing on January 14 to fix the LPG prices domestically.
When contacted, CAB energy adviser Professor Shamsul Alam said the new tariff structure was announced by the BERC to satisfy the private sector investors.
The commission considered the Saudi Aramco CP price of March 2021 to fix the domestic LPG price, which was the highest in the past several years, he noted.
As the public hearing took place in January 2021, the BERC should consider the Saudi Aramco CP price of January, when the price of Propane and Butane was $550 per tonne and $530 per tonne respectively. So, the LPG tariff here would come down significantly as a consequence.
The commission should not take three months to give its verdict, as the Saudi Aramco CP price is released during the first week of every month, opined Mr Alam.
He also was critical over the BERC's decision to fix new tariff every month, as what he said, the commission does not have any jurisdiction to change tariff even by a single paisa without holding public hearing.
If the commission would consider the Saudi Aramco CP price of April, when the price of propane and butane was $560 per tonne and $530 per tonne respectively, the new tariff could be around 15 per cent lower, said a LPG trader.
The new tariff was incomplete and the announcement was made without carrying out necessary homework, alleged Mohammed Saidul Islam, an expert in LPG sector business.
Despite repeated attempts, comment from any private sector LPG operator over the new tariff could not be received.
Sources said in the public hearing in January the consumers' group sought quality LPG at affordable price, left-leaning political leaders demanded a price slash, while the operators demanded a price hike.
The BERC Technical Evaluation Committee (TEC) had recommended fixing the price of a 12-kg LPG cylinder at Tk 866, a 35-kg cylinder at Tk 2,525, and a 45-kg LPG cylinder at Tk 3,246.
The LPG Operators Association of Bangladesh (LOAB) had sought fixing the price of a 12-kg cylinder at Tk 1,259, a 35-kg cylinder at Tk 3,672, and a 45-kg cylinder at Tk 4,721.
Privately owned Promita LPG sought a 12-kg cylinder at Tk 1,024, a 35-kg cylinder at Tk 2,987, and a 45-kg cylinder at Tk 3,840.
LP Gas Ltd sought a 16.66 per cent hike in its 12.5-kg LPG cylinder price - at Tk 700 each from Tk 600, during the public hearing.
Market insiders said Bangladesh imports around 95 per cent of its total LPG requirement from global sources, while LP Gas Ltd produces around 20,000 tonnes of LPG by refining crude oil and condensate.
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