LPG importers and the Bangladesh Energy Regulatory Commission (BERC) came under intense scrutiny at a public hearing on Thursday as consumers questioned why liquefied petroleum gas (LPG) was not available at officially fixed prices and accused the regulator of failing to ensure compliance.
Distributors and retailers also raised concerns over the practices of importers, while industry representatives called for substantial increases in commissions and operating charges across the supply chain.
The BERC technical committee has recommended raising the commission for importers of a 12kg LPG cylinder from Tk 200 to Tk 280. It also proposed increasing distributors’ commissions from Tk 50 and retailers’ commissions from Tk 45 to Tk 70.
If the recommendations are implemented, the official price of a 12kg LPG cylinder would rise from Tk 1,837 to Tk 1,976.
The hearing was inaugurated by BERC Chairman Jalal Ahmed at the BIAM Auditorium on Thursday, October 29. Commission members Abdur Razzaq, Md Mizanur Rahman and Brigadier (retd) Shahid Sarwar were also present.
The commission has asked interested parties to submit any further written observations by Sunday, November 1.
Importers seek higher commissions
LPG importers proposed considerably higher commissions than those recommended by the technical committee.
For a 12kg cylinder, Omera proposed increasing its commission from Tk 200 to Tk 478, Petromax sought Tk 349, Delta proposed Tk 360, while Meghna Group proposed Tk 300.
Distributors sought an increase in their commission from Tk 50 to Tk 150 per cylinder. Retailers, meanwhile, proposed raising their commission from Tk 45 to Tk 70.
The technical committee also recommended revisions to several other components of the LPG distribution cost structure.
The storage and bottling charge, which includes transportation from an operator’s plant to a distributor, currently stands at Tk 16.74 per kilogram. Industry proposals sought an increase to between Tk 27.62 and Tk 36.92 per kg. The committee recommended Tk 23.48 per kg.
The distribution charge, including transportation to retailers’ premises, currently stands at Tk 4.17 per kg. Against proposals ranging from Tk 8.34 to Tk 12.50, the committee recommended Tk 6.67 per kg.
For retailers, excluding home delivery costs, the existing charge is Tk 3.75 per kg. Although proposals ranged from Tk 5.83 to Tk 7.50, the committee recommended Tk 5.83 per kg.
Taking all costs into account, the total retail-level cost currently stands at Tk 153.60 per kg. Proposals sought an increase to between Tk 158.91 and Tk 185.97, while the technical committee recommended Tk 164.68 per kg.
Distributors complain of supply disruptions
Abu Taher Qureshi, organising secretary of a distributors’ association, said importers were expected to ensure that bottled LPG reached households, but supplies were often suspended when a market shortage emerged.
He argued that additional costs incurred by distributors made it difficult for them to sell LPG at the officially prescribed price.
Qureshi called for transportation expenses to be included in the cost calculation.
Responding to the concern, the technical committee said LPG had to be transported over varying distances across the country. Keeping the transportation component with importers would allow them to account for differences in delivery costs, including the distance to individual distributors.
Consumers demand enforcement of official prices
Khaleelur Rahman, an adviser to the Consumers Association of Bangladesh (CAB), said BERC had a responsibility to consider consumers’ interests when reviewing LPG prices.
He argued that a public hearing would serve little purpose if consumers’ concerns were not adequately reflected in the decision-making process.
Rahman called for prices not to be increased and urged the regulator to ensure that LPG was sold at its officially announced rates.
The latest round of price disputes follows a fresh increase in international LPG prices in September. In October, BERC raised the price of a 12kg cylinder by Tk 252 to Tk 1,837.
However, consumers have reportedly been paying Tk 2,200 to Tk 2,500 per cylinder in the retail market, significantly above the official price.
Consumers at the hearing demanded a firm assurance that LPG would be available at regulated rates.
BERC Chairman Jalal Ahmed acknowledged that the commission could not evade responsibility for the situation.
He said the regulator was strengthening market monitoring and would take action against anyone attempting to create an artificial shortage. A software-based monitoring system was also being developed to improve oversight of the market, he added.
Industry seeks protection for investment
Abu Sayeed Raja, chief financial officer of Meghna Fresh LPG, said Bangladesh’s LPG market was expanding rapidly, with investment in the sector estimated at Tk 40,000 crore.
He said protecting these investments was important for the long-term sustainability of the industry.
Raja explained that LPG was transported to Kutubdia on large vessels before being distributed across the country through smaller vessels and road transport. According to him, some of these costs had not been incorporated into the pricing structure during the previous public hearing in 2021.
He proposed a 15 per cent interest rate on bank loans and a 30 per cent return on equity. He also called for distributors’ commissions to be raised to Tk 120 and retailers’ commissions to Tk 150 per cylinder.
He argued that revising the cost structure would help ensure sales at officially determined prices.
Raja further said LPG operators had to obtain 31 licences to conduct business, resulting in substantial compliance costs. Fees alone amounted to around Tk 3 crore, he claimed.
Import constraints blamed for market instability
Anik Kumar Sen, chief operating officer of Orion LPG, spoke on behalf of several companies, including Orion, Beximco and Unigas.
He said a number of companies had been unable to import LPG for various reasons, creating supply constraints in a market where those companies collectively had around 15 million cylinders in circulation.
Sen argued that ensuring supplies through companies that were still importing LPG could help ease shortages in the market.
Dispute over commissions dates back to 2021
The latest debate over LPG commissions reflects a longstanding disagreement between the regulator and industry operators.
On April 12, 2021, when BERC first announced LPG prices, the LPG Operators Association of Bangladesh (LOAB) objected to the commission of Tk 143 for a 12kg cylinder, arguing that the amount was inadequate.
About five months later, on September 13, 2021, BERC increased the commission to Tk 186 per cylinder. The amount was subsequently raised to Tk 200 last month.