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LOAB terms BERC's LPG pricing formula faulty, demands 'acceptable' one

FE Online Report | Tuesday, 15 June 2021


Privately owned LPG (liquefied petroleum gas) operators have termed the pricing formula of the country’s energy regulator ‘faulty’ and demanded an ‘acceptable’ one.

They also warned of the consequences if Bangladesh Energy Regulatory Commission (BERC) endorses further any ‘arbitrary’ pricing of the LPG, which deem not ‘suitable’ to them.

The LPG businesses, having a size worth around Tk 300 billion, are already facing anomaly due to the price discrepancies, they alleged adding, sales and marketing of this cooking fuel already disrupted as the consequences, they claimed.

The operators demanded the addition of Tk 224 for a 12-kg LPG cylinder as costs of the operators while fixing the new retail price of LPG by the BERC.

LPG Operators Association of Bangladesh (LOAB) spelt out their demands during a press conference in a city hotel Tuesday.

The BERC has been fixing the retail prices of LPG over the past three months, under a pricing formula, which include cost components of the LPG operators, Saudi Aramco contract price, fluctuations of foreign currency, and change in the value-added tax (VAT) rate.

The pricing formula was set after the maiden public hearing on fixation of LPG prices in January, which was arranged by the commission following the High Court order.

The LOAB, however, welcomed the commission’s consideration of the Saudi Aramco CP as the benchmark for fixing LPG prices in the domestic market and demanded that domestic prices should be fixed immediately after the fixation of the price in the international market.

Speaking at the press conference the LOAB President Azam J Chowdhury alleged that the pricing formula as fixed by the BERC did not reflect the proper cost and assumed ‘improper’ profit of private operators.

There were discrepancies while calculating costs in some five to six cost components of the operators, which include freight, return on equity, the margin of distributors and retailers and in the pricing formula, for which the LPG operators were incurring losses, he said.

The price discrepancy has already aggrieved LPG distributors and retail sellers across the country said the LOAB leaders.

The distributors and retail sellers have already suspended sporadically the LPG sales in the country’s South West and North West region, they added.

The LOAB has already submitted their proposals to the BERC and the commission and would arrange a public hearing on their proposals during the first week of July. 

Sources said the regulator has been fixing the retail prices of the cooking fuel every month since April last following a court’s verdict.

But most of the consumers were not getting it at the administered price, consumers have alleged.

A 12kg LPG being provided by private operators is Tk 842 for June trading, as per the BERC’s latest order. The price was Tk 906 per for May trading and Tk 975 for April trading, as fixed by the BERC.

However, most of the consumers in Dhaka were buying a 12kg LPG cylinder at a price ranging between Tk 1,000 and Tk 1,100 over the past three months, traders said.

Currently, 27 LPG operators are doing businesses although some 58 got received licenses to carry out the business.

Some 20 operators import around 1.10 million tonnes of LPG from the international market, which is around 98 per cent of the country’s total requirement of LPG, while seven are satellite operators.

There are some 20 LPG terminals across the country and the reserve capacity has around 100,000 tonnes in total.

Some 35 million LPG cylinders are being used in the LPG businesses in the country.

Some 200 road tankers, 5,000 trucks and 21 cargoes are involved with the LPG businesses across the country.

 

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