People paying high for LPG due to pricing policy lack | 2018-01-19 |

People paying high for LPG due to pricing policy lack

UNB     19th January, 2018 10:50:09 printer

People paying high for LPG due to pricing policy lack

It has been three years since 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 has fallen through the cracks.


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


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 being sold in the local market at Tk. 1100-1200 whereas, a committee of the government's Energy Division had calculated that no way the price should cross Tk. 730.


Three years back Energy Division moved to formulate the LPG pricing policy at 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 for its promotion as alternate cooking gas, Energy Division held stakeholders' meeting with the participations of the LPG marketing companies belonging to both private and public sectors.


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 representations from both public and private sectors, made a recommendation to introduce 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 on 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 recommendation could not be implemented due to opposition from some major companies," he told UNB.


A good number of companies, including two from public sector, are operating in the LPG business in the country. The major private operators are Omera, Bashundhara, Bexmco, Total Gaz, Klean Heat, Jamuna, Orion, Bin Habib, Super Gas (TK Gas).


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


He rather put the onus on some unfavourable policies pursued by government that pushed the LPG prices up. As examples, he cited high license fee of Bangladesh Energy Regulatory Commission (BERC) and limitation in import of over 3,000 MT LPG vessel.


Energy Division Additional Secretary Muhammed Ahsanul Jabbar, now in-charge of LPG related affairs, admitted about the inordinate delay in finalising the LPG price policy. "We're working on it and the retail pricing formula will be in place within 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 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, total LPG market in Bangladesh was around 400,000 MT and the demand is shot up to over 500,000 MT in 2018.