Fresh LPG price hike deepens consumers' woes

The cost of cooking gas has risen again, adding to the pressure on households already paying well above the official rate in the retail market. The Bangladesh Energy Regulatory Commission (BERC) has raised the price of a 12kg liquefied petroleum gas (LPG) cylinder by Tk223 to Tk2,060.

The new rate, effective from Monday evening, puts the price of LPG at Tk171.68 per kg, up from Tk153.12. A 12kg cylinder, which cost Tk1,837 last month, has become Tk475 more expensive over the past two months.
Prices of other cylinder sizes, ranging from 5.5kg to 45kg, have also increased proportionately. 

The price of autogas, used in vehicles, has risen to Tk91.95 per litre from Tk84.62.
Of the increased Tk223 of a 12kg cylinder, only Tk74 has been allocated to cost of LPG import, Tk84 to distributors and Tk70 to retailers, with the remaining going towards storage and commissioning costs.

The price of government-supplied 12.5kg LPG cylinders has also been raised from Tk825 to Tk1,860 after remaining unchanged for a long time. However, supplies are extremely limited, leaving most consumers dependent on privately marketed cylinders.

The latest increase comes against a backdrop of widespread overcharging. Even before the new rate took effect, retailers were selling 12kg cylinders for Tk2,200 to Tk2,500, well above the previous official price. The latest adjustment is likely to add further pressure on household budgets.

LPG importers say they sell the product at BERC-fixed prices, but some distributors and retailers create artificial shortages to charge consumers more.

The price adjustment comes amid fluctuations in international LPG prices following the outbreak of war in the Middle East. Prices initially surged after the conflict began but fell following a ceasefire. They have since fluctuated over the past few months.

Meanwhile, importers, distributors and retailers have sought higher commissions, citing rising operating and transportation costs. At a public hearing organised by BERC last Thursday, they placed separate proposals for increasing their commissions.

BERC's technical committee, however, recommended raising importers' commission from Tk200 to Tk280 per 12kg cylinder. It also proposed increasing the commissions for distributors and retailers to Tk70 each.

BERC adjusts LPG prices every month in line with international market rates. When it introduced the pricing mechanism on April 12, 2021, a 12kg cylinder cost Tk975. Despite several reductions since then, the price has more than doubled to Tk2,060.

At the beginning of this year, a 12kg cylinder cost Tk1,253. The price rose to Tk1,356 in February before a VAT-related reduction brought it down to Tk1,341. It remained unchanged in March before two increases totalling Tk599 in April pushed it to Tk1,940.

The price was subsequently reduced by Tk55 in June and Tk357 in July. It rose by Tk70 in August to Tk1,598, fell by Tk13 in September to Tk1,585 and jumped by Tk252 in October to Tk1,837.