Biggest hike in LPG price to date
Bad news comes in threes, it is often said.
And for the average citizen, the third stroke of bad news, after the runaway prices of commodities and proteins, came yesterday: the liquefied petroleum gas, which has progressively become the fuel of choice for cooking and running vehicles, has become 22 percent dearer.
From yesterday, a 12 kg cylinder, the most common form for marketing the fuel, would sell for Tk 1,259 from the 27 private operators, said the Bangladesh Energy Regulatory Commission (BERC).
The private operators accounted for 98 percent of the 12 lakh tonne of LPG that was sold last year.
Previously, the official price of the cylinder was Tk 1,033, although purchase receipts obtained by The Daily Star showed consumers were paying between Tk 1,200 to Tk 1,300.
The price of LPG used in cars has been raised to Tk 58.68 a litre from Tk 50.56 a litre.
"This is a curse on us," said Md Islam, a fixed income earner from the capital's Mohammadpur area.
On one hand, peoples' income has fallen for the pandemic, and on the other, the prices of all essentials have soared, he said.
In August, inflation stood at 5.54 percent, up 18 basis points from the previous month, according to the Bangladesh Bureau of Statistics.
This is the fourth hike in the price of LPG cylinders since April, when the BERC for the first time had fixed the retail price of the fuel.
Then, the BERC stipulated that a 12 kg cylinder would sell for Tk 975, with the prices to be adjusted based on the contract prices (CP) with Saudi Arabia for propane and butane, the main ingredients for LPG.
Saudi Aramco has set its October propane CP rate at $800 per MT, up $135 per metric tonne (MT) from the September CP. The butane CP has been set at $795 per MT, up $130 per MT from September.
This is the highest propane CP since July 2014, when it was set at $820 per MT. For butane CP, this is the highest since August 2014, when it was set at $800 per MT.
"We have adjusted the price appropriately for the local market and the operators should implement it," said BERC Chairman Md Abdul Jalil at the press conference yesterday to announce the new LPG tariff.
But experts say the price hike, which is the biggest since April 12, was the energy regulator giving in to the demands of the industry stakeholders, which include the LPG cylinder manufacturers, bottling plant owners, importers and traders.
The industry stakeholders were unhappy with the BERC move to fix the price of LPG back in April.
They went on to call for a public hearing to press home their demand for an extra Tk 224 for a 12 kg LPG cylinder as the BERC's pricing formula did not incorporate all aspects of the cost components.
Until now, the BERC fixed the LPG price for the running month with the CPs of the previous month, according to Shamsul Alam, energy adviser of the Consumers Association of Bangladesh (CAB).
But this time, it fixed it in line with the current month, facilitating the private operators to sell their stock at a higher price, he said.
The price of 12.5 kg cylinder from the state-owned Bangladesh Petroleum Corporation would remain unchanged at Tk 591.
"The BERC has abandoned its responsibilities, which are creating a competitive market, controlling the unscrupulous entities and protecting the consumers' rights. Now they have paved the way for businesses to build an oligopoly in the market."
The private operators' bid to reform the pricing did not have legitimacy as the LPG operators did not apply within the month of the BERC's fixing the price as specified, according to Alam.
Despite the BERC setting the price since April, consumers have been paying higher because of non-compliance by the sellers, he added.
"We have never been able to buy any cylinder at a price that was set by the authority," said Sharif Mia, manager of Radhuni Restora in Gazipur's Rajendrapur.
In September, he bought a 30 kg cylinder at Tk 3,300. The BERC had set Tk 2,841 for a cylinder of that size.
Another consumer, Md Akram of the capital's Malibag area, said he bought a 12 kg cylinder for Tk 1,150 last month.
"When I asked them why they are charging more than Tk 1,033, the seller said the dealer charged extra for the cylinder," he added.
However, the BERC chief refused to take any responsibility for the failure in the implementation of the BERC's pricing at the retail level.
"It is the government agencies' responsibility. The people should raise their voices against extra prices as they are the source of all power," he said.