Trade
3 years ago

Public hearing to review LPG pricing formula begins July 7

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Another public hearing to review the pricing formula to fix the retail price of LPG (liquefied petroleum gas) will begin on July 7.

Bangladesh Energy Regulatory Commission (BERC) has arranged the public hearing after receiving proposals from privately owned LPG operators to review the existing pricing formula, which was fixed after another public hearing in January following a court order.

The operators, which include LPG cylinder manufacturers, bottling plant owners, importers, and traders, demanded an addition of Tk 224 for a 12-kg LPG cylinder as costs of the operators, while fixing new retail price of LPG by the BERC.

They alleged that the pricing formula as fixed by the BERC before did not reflect the proper cost and assumed ‘improper’ profit of private operators.

The LPG businesses, having the size worth around Tk 300 billion, are at stake as the consequence, they said.

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

The price discrepancy has already aggrieved LPG distributors and retail sellers across the country.

The distributors and retail sellers have already suspended sporadically the LPG sales in the country’s South West and North West region, said sources.

They also warned of the consequences if the BERC endorses further any ‘arbitrary’ pricing of the LPG, which deem not ‘suitable’ to them.

The BERC has been fixing the retail prices of LPG over the past three months, under a pricing formula, which include cost components of the LPG operators, Saudi Aramco contract price, fluctuations of foreign currency, and change in the value added tax (VAT) rate.

But most of the consumers were not getting it at the administered price, consumers have alleged.

A 12kg LPG being provided by private operators is Tk 842 for June trading, as per the BERC’s latest order. The price was Tk 906 per for May trading and Tk 975 for April trading, as fixed by the BERC.

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

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