The first-ever public hearing to fix the price of liquefied petroleum gas (LPG) will be held next week amid concerns of stakeholders like consumers, traders and investors.
Consumers are expecting rational pricing of the cooking fuel to keep their monthly costs within budget while businessmen are eyeing a good margin on sales.
In line with a court instruction, the Bangladesh Energy Regulatory Commission (BERC) has arranged a three-day hearing from January 14 to fix the LPG price in the domestic market.
LPG Operators Association of Bangladesh in its proposal to the BERC has sought a 9.0-per cent profit in LPG sales considering the global price of the fuel.
It has sought to fix the price in line with freight charges, premium rates, bank interest rates, cylinder costs and different tax measures.
The state-run LP Gas Ltd has sought a 16.66-per cent hike in its LPG price to Tk 700 per 12.5-kilogram cylinder from the existing Tk 600.
While the Consumers' Association of Bangladesh (CAB) has sought to rationale the LPG price locally to ensure that all types of consumers can afford it.
Energy experts, however, have suggested a market-based suitable pricing formula with strong monitoring by the government agencies concerned.
Currently, more than 25 LPG companies are operating in Bangladesh market that varies in sizes and investment.
Differences sort of infrastructural and logistics are also there in the LPG sector.
Currently, the Bangladesh Petroleum Corporation (BPC) fixes and announces retail LPG price for its product occasionally, but that of the private sector is fixed by investors without any public announcement.
The BPC reduced its retail price by 14 per cent to Tk 600 per 12.5-kg cylinder last July from Tk 700, although end users hardly get it at the rate.
However, the private sector now retails each 12-kg cylinder LPG between Tk 950 and Tk 1,000.
To cut LPG price locally, the BERC months ago suggested a 25-per cent subsidy on LPG import price to the operators to keep fuel costs within commoners' reach.
It also recommended fixing a unified local LPG price through public hearing the way natural gas and electricity prices are settled at retail level.
A portion of LPG price should be variable in line with the changes in global market, and the costs of LPG after its entry through ports to end users be fixed time to time through public hearing.
The BERC said it would ensure a unified LPG price at retail level and reduce public sufferings.
It also recommended LPG import through bulk cargoes having the capacity of around 20,000 tonnes or above.
Inflated transport cost is the main barrier to lowering LPG price locally, according to a BERC report.
Currently, the private sector imports through small cargoes with the capacity of 2,500-5,000 tonnes.
The LPG price in West Bengal of India is cheaper by around $60 per tonne compared to Bangladesh only due to the difference in transport cost, it noted.
India imports LPG through bulk carriers, but Bangladesh imports it through small carriers.
The BERC also suggested that the operators take the responsibility to take LPG cylinders to end users to check pilferage and use of substandard cylinders by middlemen and check accidents.
A study has revealed that an estimated 200 people have died due to LPG cylinder blasts over the years.
A committee, headed by BERC member Md Maqbul-E-Elahi Chowdhury, prepared the report in consultation with the stakeholders, including investors.
CAB energy adviser Prof M Shamsul Alam, however, demanded voiding the BERC recommendation and sought to rely on public hearing to fix LPG price.
"The operators must provide all sorts of proofs against their demands to the commission and other necessary bodies before considering new LPG price," he said.
Prof M Tamim of Bangladesh University of Engineering and Technology thinks the market itself should fix it.
The government must develop a monitoring system to ensure that the price does not go exorbitantly or illogically high, he said.
LPG consumption in Bangladesh has already reached an estimated 1.5-million tonnes per year, which was around 1.0 million tonnes in 2018.
The country consumed around 650,000 tonnes of LPG in 2017. It was around 400,000 tonnes in 2016 and 250,000 tonnes in 2015.
LPG consumption is growing rapidly since 2016 at households, commercial units and its use in vehicles mainly due to favourable government policy, duty waiver on import and its machinery.
The government strategy to popularise LPG consumption instead of piped gas to cope with the fast-depleting natural gas reserves prompted local and global firms to invest in LPG sector heavily.
Its continued drive against illegal piped gas connections, especially at households and commercial units, has also helped increased LPG use here. Seeing the sector's growth, the number of LPG operators has also increased rapidly.
azizjst@yahoo.com