A ludicrous move to rob public to pay private in LPG trade

Published: 00:00, Jan 16,2021 | Updated: 19:33, Jan 16,2021

 
 

THE proposal of the technical evaluation committee of the Bangladesh Energy Regulatory Commission for a 50 per cent increase in the price of the liquefied petroleum gas that the government markets to subsidise the private import of the product sounds as much detrimental to the only public entity in the trade as burdensome on the public. The proposal, on the whole, appears to be ludicrous so much so that it surprised LP Gas Limited, the only state-owned company that markets liquefied petroleum gas from local sources meeting only 1.5 per cent of the annual demand for about one million tonnes. The public entity, which now sells a 12.5-kilogram LPG bottle for Tk 600, proposed that the price should be increased by 17 per cent to Tk 700, citing a recent fall in production as a reason. But the regulatory commission, which has so far been known only for having rubber-stamped proposals for increase in gas and power prices, at a public hearing on Thursday proposed that the price of a 12.5-kilogram bottle of gas should be increased to Tk 902, which will include Tk 333.24 in cross-subsidy charge, from Tk 600. The commission says that the cross-subsidy funds would subsidise 25 per cent of private import cost while the importers would pay 75 per cent.

The proposal is ludicrous because this amounts to robbing the public to pay the private. While the cross-subsidy funds thus extracted from the public could account for only Tk 350 million, the overall subsidy required for liquefied petroleum gas import is Tk 9 billion in a situation where 98 per cent of the annual demand is met through import by about 20 private entities. The proposed increase is so absurd that even the LP Gas Limited managing director seeks to oppose the increase as being ‘too high.’ The LP Gas Limited chief at the hearing has said that the implementation of the proposed tariff would make the government liquefied petroleum gas costlier than the imported gas, which would ultimately drive the final nail into the coffin of LP Gas Limited. While the commission at the hearing has also proposed that the price of liquefied petroleum gas at the consumer level should be changed every month keeping to prices on the international market, which the Consumers Association of Bangladesh opposed saying that it is illegal, the commission appears to have conveniently forgot that in the recent and distant past, it has not provisioned for a reduction in oil prices when prices declined on the international market. Many individuals and entities taking part in the hearing have doubted the accounts and costs of liquefied petroleum gas companies, public and private, which warrants an expert committee inspection of the accounts and costs.

The proposal is, in all, divorced from public interests and appears to be aimed at destroying the public entity in the interests of private entities. And this is evident in the exuberance of private companies that termed the government move to stop the supply of natural gas to households in 2010 as ‘a remarkable decision’, which has helped liquefied petroleum gas import in the private sector to grow exponentially. Such a proposal that would brazenly favour private gas importers, further burdening the public, must not be considered.

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