Private LPG operators demand fixing price based on 'practical assessment'

Private operators of LPG have demanded that the Bangladesh Energy Regulatory Commission (BERC) set the price of their products on the basis of “practical assessment” operating cost.

“We want BERC to fix the LPG price on the basis of practical assessment, not on assumption”, said Azam J Chowdhury, president of LPG Operators Association of Bangladesh (LOAB), at a press conference at a hotel in the city on Tuesday.

He claimed that the LPG operators have been incurring huge losses following the price fixed by the energy regulator as the operating cost was not properly calculated.

He also alleged that local administrations have been arresting many local distributors for which they are suspending their business.

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The function was also addressed by Tanzeem Chowdhury of Omera LPG, Zakaria Jalal of Bashundhara LPG. 

The BERC has been announcing a fixed price of LPG for every month in compliance with a High Court order since April this year for which the LPG now stands at Tk842 instead of previous price of over Tk1,000.

Recently, the BERC again decided to hold a public hearing on July 7 next to re-set its pricing formula in response to a demand of the LPG operators and against this backdrop, the press conference was convened by the LOAB.

Explaining the current formula of LPG pricing Azam Chowdhury said the BERC fixes the price on the basis of a fixed-cost and some variable operating costs.

“We don’t have any difference of opinion with BERC on fixed cast as it is related with the Saudi CP (contract price), he said adding if the regulator fails to fix the LPG price on a practical basis an uncertainty will create in business and the regulator will fully be responsible for it.

“Because, the BERC’s behavior will force many operators to stop their business to avert losses”, he added.   

In a presentation, Zakaria Jalal claimed that there is a gap of Tk150 between their calculation of operating cost and the calculation of BERC.

He said  BERC did not consider an administrative cost of Tk50 per 12 kg LPG while distribution cost was calculated at Tk20 against actual cost of Tk40, retailer’s cost was calculated at Tk27 again actual cost of Tk80 cylinder cost was estimated at Tk28 against a cost of Tk56. 

He said the LPG now became a $3 billion industry across the country by the investment of private operators and its production increased to 1.1 million tons in 2021 from 100,000 tons in 2016 following a government supportive policy.

Jalal also said if the LPG is continuously selling at the current price, it will not be possible for many operators to sustain the business.