Prepare a formula to fix LPG price: Experts

Staff Correspondent

18 April, 2021 12:00 AM printer

Energy experts have suggested Bangladesh Energy Regulatory Commission (BERC) formulate a formula to determine the retail price of liquefied petroleum gas (LPG) instead of fixing the price. 

They opined that the retail LPG price fixed by BERC may affect the quality of products, safety and competition in the local LPG market.

Experts made the recommendation in a discussion titled "BERC's LPG Pricing and Its Sustainability" organised by Energy & Power (EP), a magazine focusing on the energy and power sector in Bangladesh.

Energy and Mineral Resources Division Senior Secretary Md Anisur Rahman addressed the discussion as the chief guest while BERC Member (Gas) Md. Maqbul-E-Elahi Chowdhury was present as the special guest.

Bashundhara LP Gas Head of Sales Engineer Jakaria Jalal presented the keynote in the discussion.

In his speech, Anisur Rahman said a committee of the energy division has started working on formulating the LPG pricing formula.

But due to the CAB case, the court has stopped BERC from fixing the price. However, the verdict could have been different if the LPG Operators Association of Bangladesh (LOAB) had gone to the court during the consumers association of Bangladesh (CAB) case.

BERC Member (Gas) Md. Maqbul-E-Elahi Chowdhury said the maximum selling price of LPG has been fixed at Tk 975 considering the interest of consumers and operators following the March CP (Saudi Aramco contract price).

“The price has increased considering the price of LPG, transportation cost, operator, distributor, dealer trip, local transportation cost,” he claimed.

He also claimed that BERC was in favour of 25 per cent gross subsidy to make the use of LPG more attractive to the poor. But neither CAB nor LOAB supported the initiative.

“Some 3 million people are directly and indirectly involved in the country's LPG industry with an investment of Tk 320 billion,” said Jakaria Jalal. 

But due to the huge expansion of a small market, the market continues to try to capture the subsidy, he added.

"Each cylinder imported at Tk 2,500 or made at a cost of Tk 1,800 is being sold at only Tk 800 to 850. Determining the selling price of gas is a good initiative,"                

said Jalal, adding, "But the cost of funds, dealer and distributor commissions, transportation costs at the prices fixed by BERC were not properly reflected."

Therefore, operators will gradually lose competitiveness and capacity if they are to sell at fixed prices, he added.

Energy expert Dr M Tamim said the regulator could formulate a formula for pricing a product in the market. They can also monitor whether it is being followed.

Energypac Managing Director and CEO Humayun Rashid said pricing should continue through competition in a free market.

"BERC must take care so that there is no extra profit or monopoly. It should be noted that if the operator is forced to stay in business by fixing prices, the entire investment in this sector may be at risk," he added.

Dean, faculty of engineering of the Bangladesh University of Engineering and Technology (BUET) Prof Dr Ijaz Hossain, LPG Bulk Traders Eng Saidul Islam, Kamal Ahmed Babu, Proprietor of Master Distribution Point and other experts, among others, also took part in the discussion.