Shahnaj Begum: A big jump in the price of Liquefied Petroleum Gas (LPG) in the international market has created a serious stir in the local energy market as it remain an uncontrolled commodity and the market players are dominating the price as per their wish.
The price of LPG has increased by 20 to 25 per cent at the retail stores across the country, as in the last two months the LPG prices rose by US$200 per tonne in the international market amid a looming supply shortage, obviously the price in local market should be increased but how much should be a million dollar question.
At present, 15 companies import LPG and 20 companies, including the importers, retail the refillable LPG cylinders and fix its rate as per international market.
“LPG marketers can increase or decrease the price in line with the international market, but it should be logical,” said Shamsur Rahman, Chairman of BPC.
According to him the local importers spend $120 for shipping each tonne of LPG. There is a 5 per cent value-added tax at the retail level.
As a result, the prices should increase by no more than Tk 130 excluding VAT, he said.
Users have been paying an additional Tk 250 to Tk 200 per 12kg cylinder from Sunday, the demand of BPC cylinder has been increased but their production capacity is very insignificant as per demand is also a matter of concern.
According to market players, the number of LPG users reached 20 million in the country last year but the state-owned Bangladesh Petroleum Corporation (BPC) has failed to match with the demand.
Saturday’s energy trading market has the potential to be more volatile and requires traders to have access to real-time data to make quick and accurate trading decisions to safeguard against the volatility of LPG, experts said.
“It is a common practice here that the price depends on the international market. This time the demand of LPG in EU countries has increased very much and various factors influence energy trading critically, unfortunately, we failed to establish any formula or any safeguard for the consumers here like India. So time and again we are suffering,” former Energy Adviser Dr M Tamim said.
Yesterday, a 12kg cylinder of the Bashundhara LP Gas, widely used in households, was sold for Tk 1,200 in Dhaka and Tk 1,100 elsewhere. The company raised the price by Tk 150. While BPC cylinders are being sold at Tk 600. The price of larger cylinders rose by Tk 300 to Tk 350. In the international market, the price of each tonne rose on January 1 to $589 from $440.
“We increased the price to match that of the international market,” said Jakaria Jalal, General Manager at Bashundhara LP Gas.
In June last year, the LP Gas Ltd increased the 12kg cylinder price by Tk 30 and sold it for Tk 700. But the state-run company accounts for only 2 per cent of the total annual sales of 1 million tonnes.
International media said the LPG supply from the Middle East would be limited by lower crude oil output and gas in 2020, following the decision by the Organisation of the Petroleum Exporting Countries (OPEC), Russia and its allies.
In December last year, they decided to steepen production cuts to 1.7 million barrel per day from 1.2 million, with Saudi Arabia offering an extra 400,000 barrel per day in voluntary cuts starting January.
With no sign of an end to the US sanctions, especially in light of the current tensions following the killing of Iranian General Qassem Soleimani, Iranian supplies are also expected to remain scarce, it said.
Oil companies in India have raised the price of non-subsidised LPG to Rs 714 per 14.2kg cylinder from Rs 695 previously. This is the fifth straight monthly increase in cooking gas prices since September 2019, the India Today reported on January 1.
However, the Bangladesh Energy Regulatory Commission (BERC) is set to conduct a hearing on LPG from January 14 to create a formula to fix up the price of LPG for the first time. But now there is no way to tighten the belt of the private players to slash the price of LPG, BERC official comments.