LPG prices remain exorbitant despite fall on global market

Emran Hossain | Published: 20:57, Apr 11,2020

 
 

A file photo shows a man arranging LPG cylinders in Dhaka. The price of liquefied petroleum gas halved on the global market in April compared with last month with hardly any reflection on the market price of the item in Bangladesh. — New Age photo

The price of liquefied petroleum gas halved on the global market in April compared with last month with hardly any reflection on the market price of the item in Bangladesh.

Like the other countries hit by the global coronavirus pandemic, demand for LPG fell sharply in Bangladesh too after a countrywide shutdown since March 26 cut down residential and other uses of the commodity.

The government-owned LP Gas Limited has already proposed to reduce the price of LPG bottled by it, mainly for domestic consumption, by 22 per cent.

‘There is scope for lowering the price even further but would be difficult to implement with private LPG businesses not bringing down their prices,’ said Fazlur Rahman Khan, managing director of LP Gas Limited.

The government owned LPG company meets only about 2 per cent of annual LPG demand of 10 lakh tonnes in the country and is thus unable to create an impact on the market, he said.

If the proposed price cut is implemented, the price of a bottle of 12.5 kg of LPG sold by the government would go down to Tk 546 from Tk 700.

Fazlu said that the price of per tonne of LPG on the international market came down to $237 in April from $465 in March.

More than 90 per cent of LPG consumers in Bangladesh are domestic who use it for cooking and a large number of these users are restaurants who operate across the country.

After Bangladesh enforced a countrywide shutdown in late March and then extended it twice, the restaurant businesses have apparently become non‑existent.

‘We have no plans of bringing down the prices anytime soon,’ said Belayet Hossain, managing director, Jamuna LPG, country’s leading LPG marketer.

A 12-kg bottle of LPG sold by private companies cost between Tk 1,250 and Tk 1,400 at the retail level, including the cylinder price.

In January, the private LPG businesses increased the price of each bottle of LPG by Tk 150 to Tk 200 after the price of per tonne of LPG increased on the international market by $129.

In November last year, the LPG price was increased by Tk 120 per bottle after the international price for a tonne of LPG increased only $10.

The LPG price in Bangladesh is never regulated and is arbitrarily fixed by private companies.

Mushfiqur Rahman, an LPG dealer in Khulna, said that the price of 12-kg LPG cylinders marketed by different private companies had fallen by about Tk 200 or less in recent times.

‘Still, LPG is far more expensive in Bangladesh,’ said Mushfiq.

He said that a state of LPG crisis existed in the sense that the shutdown had limited their operation hours while the consumers had been unable to go out of their homes to get LPG cylinders or a refill.

Erfan Hossain, a resident of Mirzapur in Tangail, said that it was about time he got a refill but was not sure if he could because of the shutdown.

‘I am not aware of any price reduction,’ said Erfan. 

A dip in the LPG price became only a matter of time after China curtailed its economic activities to stop the spread of coronavirus in February with other countries, including the United States and the European nations, following suit in March.

‘It is really regrettable that the government failed to foresee the crisis the arbitrary business of LPG could throw general people into at this crucial time,’ said professor Shamsul Alam, energy adviser at the Consumers Association of Bangladesh.

He said that the stimulus package announced by the government to help people get through the global coronavirus pandemic would not help much unless the government succeeded in reining-in cut-throat businesses.

‘It is difficult for both the businesses and the consumers to absorb any big sudden changes in price. We will absorb the fall in price over time,’ said Shamsul Haque, chief executive officer of OMERA LLPG gas.

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