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LPG price remains high despite fall internationally

29 August,2015

RTNN News Desk: The price of Liquefied Petroleum Gas (LPG) substantially declined in the international market over the last one and a half years, but it brought no benefit for the local market.

The LPG price dropped by more than 50% in the international market since February 2014 due to weak demand and rising output. LPG is imported to Asia mainly from different Middle East countries.

Currently, the government is considering price reductions of petroleum products in the domestic market even though the price of these products slumped to a one year-low in the international market.

But the LPG importers and dealers in the country are charging the consumers extortionately high prices, cashing in on the absence of any market monitoring and control instituted by the government.

Along with, the low-cost LPG supplied by the state-run producers has failed to play any role to keep the market under control due manipulations by the dealers and distributors.

During the public hearing on gas price hike, Bangladesh Energy Regulatory Commission Chairman AR Khan said that if they increase gas prices it will help considering how to use excess revenues collected from the
household consumers to subsidise LPG cylinders.

But finally they did not consider it. On August 27, the BERC announced that the monthly bill for single gas burners will be Tk600 and double burners Tk650.

The BERC boss said that it might take the necessary regulatory actions if the authorities concerned or any of the stakeholders in the LPG sector requested the commission to rationalise the price.

According to the new gas price hike, a domestic user has to pay a maximum of Tk650 a month for a 24-hour-gas supply through pipelines, whereas a 12.5kg LPG cylinder now costs around Tk1,250-1,350.

However, in line with the international market price the price of a 12.5kg cylinder was supposed to be Tk900-1000.

The price of per tonne LPG was $1,400 in December 2013, but it dropped to $590 this month.

The cylinders are available from several sources – state-owned LP Gas Limited, and privately-owned TOTALGAZ Bangladesh, Bashundhara LP Gas Ltd, Jamuna Spacetech Joint Venture Ltd, Petredec Elpiji Ltd, BM Energy Ltd and Omera Petroleum Ltd.

While supply from the private firms often stays steady, their prices do not because of the crisis of the government brand.

Plant gate prices of 12kg LPG cylinder of Petragaz, TOTALGAZ, Bashundhara, BM Energy, Omera and Jamuna is now on an average Tk1,030.

The gap between prices at the LPG plant gate and the retail level is Tk100 to Tk120 due to transport cost and profit of distributors and retailers.

The state-owned LP Gas Limited, a subsidiary of Bangladesh Petroleum Corporation (BPC), is supposed to sell cylinders at the government-fixed rate of Tk700. But consumers alleged that they hardly see a cylinder of the company in the market.

At present, the LPG price in the district level ranges from Tk1,250 to Tk1,300.

Md Kamal Ahmed, a consumer from Satkhira district, said that they have to pay around Tk1,350 to buy a 12kg cylinder.

Mohammad Halim, an LPG user from Gazipur, urged the government to reduce the price of LPG cylinders.

Popy Akhter, a resident from Mirpur in the capital, said that the LPG price was too high compared to piped gas price. “When I go to refill a cylinder, they charge me Tk1,250 and I have nothing to do,” She said.

“The price of LPG cylinders can be controlled if all the companies are brought under a single umbrella,” Petredec Elpiji Ltd General Manager Mohammed Saidul Islam told the Dhaka tribune yesterday.

BPC Chairman AM Badruddoja said that the private firms were importing 100,000 tonnes of LPG while the government produces 20,000 tonnes a year against an annual demand of 300,000 tonnes.

“It is not possible to take control of the price due to low productivity. We do not have the workforce needed to monitor the private sector about controlling price,” he told to media.

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