The public hearing to fix the price of LPG, or liquefied petroleum gas, will begin on Thursday.
In line with a court instruction, the Bangladesh Energy Regulatory Commission, or BERC, has arranged the public hearing to be held on January 14 at BIAM auditorium in the city.
The commission will continue hearing on January 17 and 18 if it does not conclude on Thursday, a BERC notice stated.
All stakeholders are eyeing on the hearing as consumers are eyeing on a rational pricing of the cooking fuel to keep their monthly costs within budget while the businessmen are eyeing on good margin on sales of the fuel.
LPG Operators Association of Bangladesh, or LOAB, in its proposal to the BERC has sought a 9.0 per cent profit in LPG sales taking into consideration the international price of the fuel including its freights, premium rates, bank interest rates, cylinder costs and different tax measures.
State-run LP Gas Ltd has sought a 16.66 per cent hike in its LPG price to Tk 700 per 12.5 kg cylinder from existing Tk 600.
While, the Consumers’ Association of Bangladesh, or CAB, has sought to rationale the LPG price in domestic market to ensure that all types of consumers can afford it.
Currently more than 25 LPG companies are operating in Bangladesh market that varies in sizes and, investment.
Differences sort of infrastructural and logistics are also there in the LPG sector.
Currently state-run Bangladesh Petroleum Corporation, or BPC, fixes and announces retail level LPG price for its product occasionally, while the private sector’s retail level LPG price is fixed by the investors without any public announcement.
The BPC reduced its retail level LPG price by around 14 per cent to Tk 600 per 12.5 kg cylinder in July this year from Tk 700 previously.
Although the end users very rarely get BPC’s LPG at the government fixed price.
The private sector, however, is currently selling each 12 kg cylinder LPG within the range between Tk 950 and Tk 1,000 in retail level.
To trim down the price of LPG in domestic market, the BERC a couple of month back has suggested a subsidy worth 25 per cent on the import price of LPG to the operators to keep the cost of the cooking fuel within the reach of commoners.
It also recommended fixing of a unified local LPG price, which it said to be fixed through public hearing like that of natural gas and electricity price at retail level.
It said a portion of the LPG price should be variable in line with the changes in international market and the costs of LPG after its entry through the country’s ports to reaching of end users should be fixed by the commission time to time through public hearing.
It will ensure a unified LPG price at retail level and reduce sufferings of the commoners, the commission opined.
The BERC also recommended import of LPG through bulk cargoes having the capacity of around 20,000 tonne or above instead of small cargoes.
Inflated transportation cost is the main barrier for lowering LPG price in local market, the BERC report stated.
Currently, the private sector imports LPG through small cargoes having the capacity of around 2,500-5,000 tonne.
The price of LPG in West Bengal of India is cheaper by around US$60 per tonne compared to Bangladesh only due to the costs difference of transportation, it noted.
India imports LPG through bulk carriers but Bangladesh imports the fuel through small carriers.
The BERC also suggested that the operator should have the responsibility to reach the LPG cylinders to end users to check its pilferage, use of substandard cylinders by the middlemen or brokers and ultimately check accidents.
A study has revealed that some 200 people have died due to LPG cylinder-related accidents over the past several years.
A committee headed by BERC member Md Maqbul-E-Elahi Chowdhury prepared the report after consultations with stakeholders including investors.
The CAB’s energy advisor professor M Shamsul Alam, however, demanded voiding the BERC recommendation and sought to rely on public hearing with proper judgment to fix the LPG price.
The LPG consumption in Bangladesh already reached to around 1.5 million tonnes per year, which was around 1.0 million million tonnes a couple of year ago in 2018.
Bangladesh consumed around 650,000 mt of LPG in 2017 which was around 400,000 mt during 2016, and 250,000 mt during 2015.
LPG consumption is growing rapidly since 2016 in households, commercial units and the use of LPG as an auto fuel in vehicles mainly due to favorable government policy, duty waivers on import of LPG and its necessary machinery.
The government strategy to popularise LPG consumption across the country instead of piped natural gas to cope with the fast-depletion of local natural gas reserves also prompting local and international firms to come and invest in LPG sector heavily.
Government’s continued drive against illegal piped gas connections especially in households and commercial units also increasing of LPG use in Bangladesh.
Seeing the growth of LPG uses in Bangladesh the number of LPG operators also increased rapidly.