The Financial Express

Bangladesh Petroleum Corporation wants to get back authority to fix LPG price

| Updated: July 29, 2021 16:41:24

Bangladesh Petroleum Corporation wants to get back authority to fix LPG price

The energy sector regulator has been increasingly facing opposition from the LPG marketing companies on the issue of prices fixed by it for cooking gas cylinders.

Some private LPG bottlers, allegedly, have been selling the fuel at prices more than that fixed by the Bangladesh Energy Regulatory Commission (BERC).

The state-run Bangladesh Petroleum Corporation (BPC) though still sticking to the BERC-fixed prices has sought to get back the authority to fix the price of its LPG (liquefied petroleum gas).

The agency has alleged that it is now incurring loss by selling the cooking fuel at the prices fixed by the BERC.

The BPC, in a recent letter to the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR), also sought to raise its LPG price, considering higher dealers' commission as well as transportation costs, said a senior BPC official.

The state-owned corporation, however, did not submit any letter to the energy regulator, which has been fixing LPG prices for both the public and private sector fuel companies since April.

The Bangladesh Energy Regulatory Commission (BERC) fixed LPG selling price for the state-run firm at Tk 591 for each 12.5-kg cylinder, which was Tk 700 before the BERC's price fixation.

But the consumers are not getting the BPC's LPG at the BERC-fixed price due to 'corruption' on the part of unscrupulous quarters, it has been alleged.

Sources said the BERC has been fixing the retail prices of LPG over the past four months, under a pricing formula, which include cost components of the LPG operators, Saudi Aramco contract price (CP), fluctuations in exchange rates, and change in the value added tax (VAT) rate.

The pricing formula was set after the maiden public hearing on fixation of LPG prices in January, which was arranged by the commission following the High Court order.

The BPC letter to raise LPG price, however, followed the demand from the private sector operators, which also sought to hike the domestic LPG prices.

They appealed to the BERC to consider re-fixing the local LPG prices, instead of the energy ministry.

Welcoming the commission's consideration of the Saudi Aramco CP as the benchmark for fixing LPG prices in the domestic market, the LPG Operators Association of Bangladesh (LOAB) demanded that domestic fuel prices should be fixed immediately after price fixation in international market.

The LOAB alleged that the pricing formula, as fixed by the BERC, did not reflect the actual cost, and assumed 'improper' profit by private operators.

There were discrepancies while calculating costs in some five to six cost components of the operators, which included freight, return on equity, and margin of distributors and retailers in the pricing formula, for which the LPG operators were incurring loss, the LOAB noted.

The private sector operators are also not selling LPG at the administered prices, consumers have alleged.

Price of a 12-kg LPG cylinder, being provided by private operators, is Tk 891 for July trading, as per the BERC's latest order. The price was Tk 842 for June, Tk 906 for May, and Tk 975 for April.

However, most of the consumers in Dhaka were buying a 12-kg LPG cylinder at prices ranging between Tk 1,000 and Tk 1,100 over the past three months, traders said.

Currently, 27 LPG operators are doing business in the country, although some 58 received licenses to carry out the business.

Some 20 operators import around 1.10 million tonnes of LPG from international market, which is around 98 per cent of the country's total requirement of LPG, while seven are satellite operators.

There are some 20 LPG terminals across the country, and their total reserve capacity is around 100,000 tonnes.

Some 35 million LPG cylinders are being used in the LPG business in the country. Some 200 road tankers, 5,000 trucks and 21 cargoes are involved with the businesses here.

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