Sky-high prices derail govt effort to promote LPG use

It has been three years since the government decided to set a rule of the game for LPG (liquid petroleum gas) pricing.

And after all the exercises have long been done, the initiative now appears to have fallen through the cracks.

As a result, the consumers are paying through the nose for LPG bottles with no policy whatsoever in place, reports UNB.

Energy division had initiated the move three years ago to formulate a LPG pricing policy to reduce the exorbitant price, but that effort remained futile thanks to undue influences by vested interest groups.

Amid such a policy vacuum, each LPG bottle (12.5 kg) is now selling on the local market at Tk. 1,100-1,200 whereas, a committee of the energy division had calculated that the price should no way cross Tk. 730.

Three years back, energy division moved to formulate the LPG pricing policy at the government's dictate as the latter was trying to promote LPG as cooking gas as a replacement of piped natural gas, distributed by the state-owned Titas and other gas companies in Dhaka and elsewhere.

Identifying high market price of LPG as a barrier to promoting it as an alternative cooking gas, the division held a stakeholders' meeting, where LPG marketing companies belonging to both private and public sectors participated.

Taking their opinion into consideration, energy division formed a committee to draft a formula to fix the LPG price at the retail market.

The committee, headed by the then additional secretary Kazi Zebunnesa Begum, found that after meeting all expenses, a 12.5 kg LPG bottle should not be sold at above Tk. 703 and no private company should sell that at price more than Tk. 730 in retail.

The committee, comprising of representation from both the public and private sectors, made a recommendation for introducing labelling of maximum retail price (MRP) on the surface of LPG bottle and make it mandatory for traders to sell it at the fixed price.

"But some big players in the LPG sector blocked the move by their influence at the political level", said a senior official at the energy division preferring anonymity.

Introducing a permanent formula to fix the price was also a vital recommendation of the committee. "But the recommendations could not be implemented due to opposition from some major companies," he told UNB.

A good number of companies, including two from the public sector, are operating in the LPG business in the country.

Major private operators include Omera, Bashundhara, Bexmco, Total Gaz, Klean Heat, Jamuna, Orion, Bin Habib, Super Gas (T K Gas).

Disagreeing with the concept of LPG price fixing, Jakaria Jalal, general manager (strategic planning), of Bashundhara LPG, said it would be unrealistic to fix the LPG price for retail market as the price of the product is linked with that on the global market where it fluctuates.

He rather put the onus on some unfavourable policies pursued by the government that pushed the LPG prices up.

Giving examples, he cited high licence fees of Bangladesh Energy Regulatory Commission (BERC) and restrictions on the import of over 3,000 tonnes of LPG vessel.

Energy division additional secretary Muhammed Ahsanul Jabbar, now in-charge of LPG related affairs, admitted that the inordinate delay in finalising the LPG price policy exacerbated the situation.

"We're working on it and the retail pricing formula will be in place within the next six months," said the official.

Contacted, state minister for power and energy Nasrul Hamid expressed his frustration over the delay.

"I'm not happy with overall performance of energy division as it achieved only 9.0 per cent in ADP implementation," he told UNB.

Industry insiders noted that in spite of high price, LPG market is growing gradually in Bangladesh.

In 2016, the total LPG market in Bangladesh was around 400,000 tonnes and the demand shot up to more than 500,000 tonnes in 2018.