20th January 2021
EP Report

Amid different proposals submitted by the operators, the Technical Evaluation Committee (TEC) of Bangladesh Energy Regulatory Commission (BERC) has suggested readjusting the price of Liquefied Petroleum Gas (LPG) every month.


At a public hearing held recently, it also suggested introduction of a pricing formula to fix the LPG price in the domestic market in line with the international price.


The TEC recommended fixing price of a 12-kg LPG cylinder 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 provides a subsidy of Tk 300.


The BERC will announce its final price in 90 days after scrutinizing the proposals. It considered that it should use LPG's cross subsidy fund here for keeping the volatile LPG market at consumers' tolerance level.


The TEC presented its report on both private companies' proposals and also the public company’s proposal.


The maiden hearing on fixing he retail price of LPG in domestic market was held in presence of BERC Chairman Md Abdul Jalil and its full panel members at BIAM Auditorium n Dhaka.


Currently, state-run Bangladesh Petroleum Corporation (BPC) fixes and announces retail level LPG price for its product occasionally, while the private sector's retail price is fixed by the operators without any public announcement.


There are 28 LPG operators in the country at present with the capacity to provide two million tonnes of gas annually, against a demand of one million tonnes. Private companies are providing around 98% of the total demand.


To ensure a level-playing field across the country, the TEC said the retail price of LPG would be based on the import parity price (IPP) plus bottling and storage charges, distribution charges, dealers' margin and VAT. The price of Auto Gas would follow the IPP plus bulk transportation cost, station Charges, VAT, storages and bottling charges. It also said IPP means that the Saudi Contract Price (Saudi CP) plus premium charges and freight cost of LPG.


Following a court’s instruction, the BERC started the three-day public hearing on the day but it was concluded on the first day as most of the technical issues were sent to the technical committee to discuss first.


The hearing witnessed no big debate over the pricing issue, rather the consumers' right body, CAB raised issues related to the 'power and authority' of the BERC and its autonomy.


"Considering the Covid pandemic, we are inviting all to post their valued opinion on our website by January 21," BERC Chairman Md Abdul Jalil said in his concluding remarks at the hearing.


Six officials from six major LPG traders presented their written arguments. Top officials from Petromax LPG Ltd, Omera Petroleum Ltd, Beximco LPG Ltd, Bashundhara LPG, Promita LPG, Universal Gas & Gas Cylinder Ltd, LP Gas Ltd and representatives of the LOAB took part in the hearing.


They sought 9.0 percent profit margin on 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.


Both the consumer right groups and business operators demanded stoppage of the administrative interference in the price fixing process of LPG moved by the energy regulatory body.


They urged determining a single regulator to play watchdog role in ensuring a fair price of the LPG at consumers' level by protecting both the interest of the consumers as well as the operators in the business.


Managing Director of the state-owned LP Gas Company Limited Fazlur Rahman and also top executives of six other private LPG companies made their presentation in the hearing while Deputy Director of BERC Quamruzzaman presented the Technical Evaluation Committee (TEC) report.


Prof M Shamsul Alam, Advisor of the Consumers Association of Bangladesh (CAB), Ruhin Hossain Price of Communist Party of Bangladesh (CPB), Mohiuddin Ahmed of Bangladesh Mobile Phone Consumers Association took part in the public hearing. 


"Interference of Energy Division in LPG price fixing process is a clear violation of the BERC Act-2003 which gives a clear mandate to the energy watchdog to fix the prices of 25 petroleum items including this LPG," said CAB Advisor Prof M Shamsul Alam. He also opposed the recommendations of TEC to raise the price of 12.5 kg LPG containers of the state-owned companies from current Tk 600 to Tk 900.


It will be unwise and unjust to raise the LPG price of state-owned LPG Company Limited on the ground of bringing a rationality between the public and private companies’ product prices, he said. If it happens, the state-owned company’s LPG will face the similar fate of state-owned sugar mills as those remain unsold, he added.


The TEC also urged the commission to ensure safety, security and standard of LPG bottles to ensure consumers' safety at the highest level.


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