LPG Crisis: Consumers hit hard as cylinders vanish amid rampant overcharging

Liquefied petroleum gas (LPG) cylinders have become scarce in Dhaka city as some retailers are selling the cylinders at higher prices covertly, fearing raids and mobile courts by the administration.

Amid artificial scarcity of LPG supply, the retailers continue charging higher rates, ignoring the fixed prices, even after the latest hike. During the last few years, the LPG cylinders were selling at higher rates than the government-fixed prices, due to a mismatch between LPG supplies and real demand in the markets, said the sector insiders.

LPG cylinders are hardly available in some major areas of the capital, though retailers in some parts of downtown Dhaka are selling a 12kg cylinder for as high as Tk 2,500, with little impact of the government-fixed price of Tk 1,837 visible in the market.

Retailers said LPG suppliers are charging around Tk 2,200 for a 12kg cylinder, a day after the latest price hike by the Bangladesh Energy Regulatory Commission (BERC).

They said cylinders at the new rate are expected to enter the market from Tuesday and consumers may have to pay Tk 2,300 to Tk 2,400 for a 12kg cylinder from Wednesday.

Sector insiders attribute the chronic market distortion to a widening structural gap between actual national demand—estimated at around 1.4 to 1.5 million metric tonnes annually—and the constrained supply chain, leaving market forces to dictate rates regardless of regulatory orders.

Retailers reported that primary LPG distribution companies are already invoicing dealers between Tk 2,100 and Tk 2,200 per 12-kg cylinder, rendering the government-fixed rates unviable at the field level.

"Though the government fixed the price at Tk 1,837, the bottling companies themselves are charging us up to Tk 2,200," said Abdul Wares, an LPG supplier in the Boro Moghbazar area. "Adding transport costs and labor charges, how is it possible to sell at the official rate? It inevitably reaches Tk 2,400 at the consumer level because the government fails to enforce rates at the company point."

Traders warned that fresh stock under the newly declared rates will flood the market by Tuesday, potentially pushing consumer prices up to Tk 2,400 per 12-kg cylinder by Wednesday.

For October, BERC adjusted the retail price of private LPG to Tk 153.06 per kg (including VAT), up from Tk 132.08 per kg in September. Consequently, prices for other cylinder variants have also surged: 5.5-kg cylinders are set at Tk 842 (up from Tk 727), 12.5-kg at Tk 1,913 (up from Tk 1,652), 15-kg at Tk 2,296, 20-kg at Tk 3,061, and 45-kg commercial cylinders at Tk 6,888.

Autogas, heavily used in motor vehicles, saw a steep hike of Tk 11.53 per litre, reaching Tk 84.62 from September's Tk 73.09. Reticulated LPG liquid form was set at Tk 149.31 per kg.

The price of state-owned LP Gas Limited’s 12.5-kg cylinder remains unchanged at Tk 776.93, but its negligible market share offers little relief to the vast majority of consumers.

The regulator attributed the sharp price hike to a rise in international contract prices. Saudi Aramco's average Contract Price (Saudi CP) for propane and butane (35:65 ratio) jumped to $712.50 per metric tonne for October, up from $647.75 in September.

Although BERC instructed storage and bottling licensees to issue proper VAT invoices and adhere strictly to post-bottling price caps, business representatives urged the government to realistically assess national demand and streamline import channels to stabilize the volatile energy market.

Source: UNB