BERC's Fixed Price Exists Only on Paper: 12kg LPG Cylinders Selling at Tk 2,200 to 2,400

Even after the price of bottled liquefied petroleum gas (LPG) used for cooking was raised twice in two consecutive months, there is still no order in the market. Sellers at various levels are not obeying the price set by the Bangladesh Energy Regulatory Commission (BERC). Customers are being forced to buy LPG cylinders at whatever price sellers demand.

BERC has said evidence has been found of three companies selling bottled LPG at higher than the set price. Instructions have been given to take action against them.

For several months, especially since the Iran-US war began, there has been chaos over bottled LPG prices in the country. Ignoring BERC's set price, sellers are selling cylinders at prices of their choosing. At one stage, citing a crisis, Tk 2,700 was even charged for a 12kg gas cylinder.

After various government steps, prices came down somewhat, but they remain far above the price set by BERC. Although imports are in line with demand, a supply crisis is cited as the excuse for raising prices. But LPG importers and bottling companies say supplies are fine and blame dealers, distributors and retailers for the price rises. About ten million people use LPG for cooking.

For more than a month and a half, bottled LPG has been selling at 30 to 40 percent above the BERC-set price. To control prices, BERC raised LPG prices in October and November. Commissions for traders at three levels were also increased. Yet there is still no order in the market. The 12kg cylinder continues to sell at retail for Tk 2,200 to 2,400, as before. Yet the government-set maximum price for 12kg of LPG for this November is Tk 2,060.

This pattern of prices began in mid-September. The maximum price of 12kg LPG was then set at Tk 1,585, but it sold in the market at Tk 2,200 to 2,400. In October, BERC raised the 12kg cylinder price by Tk 252 to Tk 1,837, but it still sold at the old price; in places, sales at Tk 2,500 were also reported. In November the price was raised by another Tk 223 to Tk 2,060. But traders are not obeying that price.

Speaking on Wednesday with retailers, LPG customers and distributors in the capital, it emerged that they believe a supply shortage of LPG still persists in the market. Companies are supplying less. As a result, many companies' LPG is not available at the government-set price.

Azizul Islam, manager of Randhuni Restaurant in Dhaka's Bansree, said on Wednesday, 'The price the government sets stays confined to paper only. We are still buying 12kg LPG cylinders at Tk 2,400 to 2,500, as before. There is no sign of prices coming down. We are forced to buy.'

Asked about the extra price, retailer Mohammad Monir said a supply shortage still persists at various levels of LPG. Dealers used to deliver gas-filled cylinders to shops; now cylinders cannot be found even after chasing dealers. They get a few companies' gas at the price the government has set at retail level. But three companies' cylinders have to be bought at Tk 2,200 to 2,250. As a result, they have to sell at Tk 2,300 to 2,400.

Distributors and retailers say the higher price is being charged at the plant itself. An LPG distributor said that on Wednesday too, 12kg gas cylinders were sold from several companies' plants at Tk 90 to 240 above the government-set price. They have informed BERC of the matter and are waiting to see what action the commission takes.

Although a crisis is spoken of in the market, the import picture shows more LPG has been imported than demand. In August 157,000 tonnes were imported, in September 158,000 tonnes, and in October roughly the same amount. Monthly LPG demand in the country is 130,000 to 150,000 tonnes.

Although the government has warned of strict action over an artificial crisis in the market, those responsible have not been identified. Although complaints have been filed with BERC against irregularities by several importing firms, the commission has given no clear statement on those matters.

When his attention was drawn, BERC chairman Jalal Ahmed said evidence has arrived that at least three companies are selling LPG above the set price. However, these companies do not import directly; they buy from other importers and bottle the gas. He has instructed that action be taken against them.