Panel for fixing LPG price at rational levels

Syful Islam | Published: August 20, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

A government-assigned body has suggested setting liquefied petroleum gas (LPG) tariff at retail level not more than 1.5 times of landed cost or cost and freight (C&F) price of raw materials, officials said.
The recommendation equally applies to the fuel produced by both government and private sectors, now that the government is bent on expanding LPG usage for all sections of consumers, including households.
By calculating international market prices during May 2015 to April 2016 of Propane and Butane, from which LPG is produced, the panel suggested setting the price of government-produced 12.5-kilogram (kg) LPG cylinder at Tk 732 and private sector's 12kg cylinder at Tk 703 at retail level.
"As use of LPG is set to rise because of government's decision not to allow piped gas for cooking anymore in the near future, we are working to provide people LPG at a rational price," a senior official of energy division told the FE.
"During calculating LPG price, we have taken all the costs including import of raw material, bottling margin, value added tax, marketing company margin, transportation freight, dealer commission, and profit of bottling company into consideration," the official said.
Now opinion on the proposed LPG pricing has been sought from the ministry of finance, the National Board of Revenue, the chairman of Bangladesh Petroleum Corporation, the chairman of Petrobangla, the chief inspector of explosives, the managing director of Rupantarita Prakritik Gas Company Limited (RPGCL), and the managing director of LP Gas Ltd.
"After getting opinion from the government bodies and private sector we will fix the new price of LPG," the official said.
Joint secretary of energy division Kazi Zebunnesa Begum headed the committee which recently submitted its report to the ministry for next course of action.
Â The committee suggested that LPG price should be fixed based on import prices of raw materials. While fixing the proposed LPG price, the prices of last three months of Propane and Butane should be taken into consideration.
It also said the prices of Propane and Butane changed each month to some extent. So, the price of LPG should be re-fixed once in three months by forming a permanent price- fixation body under the cabinet division.
The committee also suggests that LPG price can be re-fixed immediate next month if prices of Propane and Butane go down or up significantly on the international market.
In this regard it cited the example of LPG pricing in India where price is adjusted at retail level immediately after import price change. Â
According to officials the gazette price of 12.5kg LPG cylinder since July 2012 is Tk 700. However, there was no LPG cylinder available in the market at this price.Â Â
Moreover, the prices of Propane and Butane, as well as ready LPG have decreased significantly on the international market since last gazette notification was published, but the government was yet to cut the price for users at home.
The prices of 12.5kg LPG cylinder stand between Tk 1,100 and Tk 1,300 based on different companies, it was found.
LPG cylinders of state-owned LP Gas Limited, privately-owned Bashundhara LP Gas Ltd, TOTALGAZ Bangladesh, Jamuna Spacetech Joint Venture Ltd, Omera Petroleum Ltd, Petredec Elpiji Ltd, and BM Energy Ltd are available on the market.
But consumers allege that cylinder of state-owned LP Gas Limited which is supposed to sell 12.5kg LP gas at Tk 700 is hardly found on the market.
When contacted, director (marketing) of Bangladesh Petroleum Corporation Mir Ali Reza told the FE Friday many of the private-sector companies had already come to the market with LPG.
Some 20 more companies are about to get approval for marketing LPG as the demand is going to grow in the near future.
Mr Reza said the present LPG demand is 400,000 tonnes a year and 20,000 tonnes are being supplied by the state-owned LP Gas Limited.
"The price of LPG will go down, despite a demand rise, since its international price fell significantly, and many private-sector companies are in the market to sell the item," he said.
Asked if there is any step to raise capacity of the LP Gas Limited to intervene in the market when the LPG price becomes volatile, he said the BPC is working to start a project in Mongla for producing 100,000 tonnes a year.
"Maybe, we will go for joint venture to establish the company," Mr Reza said.
Â Â Â syful-islam@outlook.com