Dhaka, Tuesday

28 September 2021

Business Insider Bangladesh

LPG price to increase by Tk 5.41 per kg next month

LPG business gets through tough time: LOAB

BI Report || BusinessInsider

Published: 14:16, 13 September 2021   Update: 22:57, 13 September 2021
LPG price to increase by Tk 5.41 per kg next month

Representational photo

The Bangladesh Energy Regulatory Commission (BERC) has increased the price of per kilogram of liquefied petroleum gas (LPG) by Tk 5.41, which will come into effect on October 1.

Currently, a kg of LPG sells at Tk 86.07 and it will be sold at Tk 91.48 in October.

The BERC came up with the announcement in a mass hearing held at the BIAM auditorium in the capital on Monday.

LPG Operators Association of Bangladesh (LOAB) has said that LPG business cannot continue without a reasonable price.

As LPG is a highly subsidised sector, it will not be possible to carry on the business with a 1.7 percent (per kg) profit margin, said the group at a public hearing on LPG pricing organised by the BERC in Dhaka on Monday.

Entrepreneurs have already invested Tk 35,000 crore in the LPG sector that employs 13 lakh workers. To save the sector, it is necessary to set a reasonable LPG price, it said.

The leaders of the group complained that the BERC had fixed the price for the importers who are small or medium in size (8,000 metric tonnes), pushing the big importers who import from 1,000 to 1,500 tonness of LPG are in deep crisis.

Muntasir Alam, Chief Commercial Officer of Beximco, Jakaria Jalal, Chief Commercial Officer of Bashundhara Group, Shamsul Haque Ahmed, Chief Executive Officer of Omera, Nafis Kamal, Director of Petromax and General Manager of Mojibur Rahman of Total Gas spoke at the hearing.

At the public hearing, the LOAB said the price set by BERC for LPG was based on the Saudi CP (contract price) price. “Since LPG is an imported product, we have no objection to it. However, after the import of LPG, the charge set by the commission for transportation, bottling, storage, operating expenses of the product is the lowest,” said one of the LOAB leaders.

“As a result, the big businesses are incurring losses. While the big companies are losing, the small companies are almost on the verge of closing down. No one will be interested to invest in this sector for the poorest profit that the BERC set.”

He claimed LPG price is lower in Bangladesh than in other South Asian countries. Twenty-seven companies are currently operating in the country.

According to the LOAB, LPG storage, and bottling charges, the commission has fixed the charge at the rate of Tk 11.93 per kg (Tk 143 for 12kg), distribution cost Tk 2, and retailer cost 2.25 (Tk 24 and Tk 27 for 12 kg) which are unreasonable. The cost should be Tk 130 (50+80).

Similarly, the businesses disagreed with the commission’s charge on net profit, interest on loans, sales and administrative expenses, the lifespan of cylinders, sales volume.