A 12kg cylinder of liquefied petroleum gas (LPG) is selling for BDT 2,000 to as much as BDT 2,500 in the domestic market, but the gas is unavailable in many places even at these higher prices. Retailers and distributors have blamed a supply shortage for the higher prices, alleging that the situation has arisen because they are not receiving enough LPG to meet demand. Operators, on the other hand, claim there is no shortage of LPG in the market. The higher prices have caused widespread dissatisfaction among consumers.

As of September 22, Bangladesh imported 118,742 tonnes of LPG this month, while the figure stood at around 157,760 tonnes last month, reflecting an import fall by around 40,000 tonnes as of September 22.

Discussions with the country’s two leading LPG operators indicate that imports could be 25–30 percent lower this month than in August as the Middle East crisis has made key shipping routes, including the Red Sea and the Strait of Hormuz, increasingly risky. Consequently, sufficient cargo vessels are not available, and transportation costs have risen several-fold.

A large share of Bangladesh’s LPG imports comes from the Middle East. Despite long-term contracts, many international suppliers have reduced supplies by up to around 20 percent, according to operators.

The Bangladesh Energy Regulatory Commission (BERC) has set the retail price of a 12kg LPG cylinder at BDT 1,585 for the current month, but the product is not available at this price anywhere in the market. The cylinder is instead being sold for BDT 2,100 to as much as BDT 2,500.

Iqbal Hassan Mahmood, minister for Power, Energy and Mineral Resources, held a meeting with LPG operators on Tuesday to discuss the market situation, imports and stock levels. At the meeting, operators said there was no shortage of LPG in the domestic market, claiming supply and stock levels remained normal.

But a supply shortage of LPG has emerged as one of the main reasons behind the higher prices in the market. Conflicting statements from operators, distributors and retailers have created a degree of instability in the market.

Consumer rights organisations say that although there is no shortage of LPG imports in the country, an artificial shortage is being created. As prices of the product are rising in the global market, there is a tendency to stockpile it. They said BERC and law enforcement agencies need to play a stronger role. Otherwise, the price of the product could move beyond consumers’ reach.

To assess LPG prices and the supply situation in Dhaka, this correspondent visited several locations yesterday. Retailers broadly pointed to a supply shortage in their accounts.

Mizanur Rahman Mizan, proprietor of Rabbi Electric and Hardware in the Dhaka Udyan area of Mohammadpur, told Bonik Barta, “Supplies in the market are low, so we have to buy gas from dealers at higher prices. That is why the price has increased somewhat.”

He said he sold 12kg cylinders for BDT 1,850 to BDT 1,900 on September 23 and 24. The same cylinder now sells for BDT 2,100.

An LPG trader in Mirpur said LPG prices had increased by BDT 300–400 in a week. He is currently selling a 12kg LPG cylinder for BDT 2,100 to BDT 2,200.

Around 143,000 tonnes of LPG imports were approved for 14 operators last month based on demand, according to data from the Department of Explosives. National Board of Revenue (NBR) data show that Bangladesh imported 157,000 tonnes of LPG in August, which was higher than demand.

Import approval for the current month stands at 140,000 tonnes, while 118,742 tonnes had arrived by September 22. Operators said several more vessels are expected to arrive this month, yet saying imports could be lower than in the previous month. Overall, 436,694 tonnes of LPG arrived in Bangladesh between July and September.

Private operators account for 98 percent of LPG imports into the country. Of the imported LPG, 80 percent is used in households, 12 percent by industrial and commercial establishments, 5 percent is used in vehicles, and 3 percent in other sectors.

A visit to the market found that retailers were charging consumers higher prices, citing an LPG shortage. When asked why they were selling the product at higher prices, retailers blamed distributors and dealers. Distributors and dealers, in turn, alleged that they were not receiving enough supplies from operators to meet demand, adding that higher truck rental costs for transporting LPG were affecting the price of the product. Operators, however, said they were supplying LPG to the market at the BERC-set price and that there was sufficient supply of the product in the market.

But at least two operators, speaking on condition of anonymity, said global LPG supplies had declined due to the closure of the Strait of Hormuz and disruptions in the Red Sea.
A sharp rise in freight costs on top of the CP price — the Saudi Arabia-announced monthly LPG price — has also created a risk of losses from importing the product at higher prices. Cargo prices in the spot market are also significantly higher. Many operators have consequently reduced imports to some extent.

If the situation persists and the regulatory commission does not increase the premium for LPG imports, many operators may further reduce imports. One operator has already applied to BERC for an increase in the premium.

BERC has set the premium for LPG imports into Bangladesh at $160 per tonne. But shipping costs and the traded premium have risen from $250 to as much as $450 due to the war situation. Many operators said that unless the premium is increased under the circumstances, a shortage of LPG imports could emerge.

Five percent of LPG consumed in Bangladesh is used in the autogas sector, amounting to around 20,000 tonnes. There are around 1,100 autogas stations across the country, of which 70 percent are currently closed. Those that remain operational are struggling to survive with limited supplies. Officials at some stations said they were not receiving enough LPG from operators to meet demand, leaving the stations without the product.

Engineer Serajul Mawla, president of the Bangladesh LPG Autogas Station & Conversion Workshop Owner’s Association, told Bonik Barta, “70 percent of autogas stations in the country are closed due to the LPG shortage. Despite making repeated attempts to secure autogas supplies, we haven’t received any assurance. We’ve formally written to BERC on behalf of the association. If the situation continues, the autogas sector will collapse.”

BERC did not deny that LPG was being sold at higher prices or that there was a shortage in the domestic market. Asked about the situation, BERC Chairman Jalal Ahmed told Bonik Barta, “We’re hearing that there’s an LPG shortage in the market. But it doesn’t appear that imports have declined. The country received 157,000 tonnes of LPG last month. So far this month, 140,000 tonnes have been imported. But freight costs for importing LPG from the international market have increased. We had reduced this earlier. We’ll certainly consider it. Apart from this, the LPG supply shortage could also be caused by domestic factors.”

Although evidence and complaints have emerged over the LPG shortage, price hikes and stockpiling in the country, operators told the power, energy and mineral resources minister that there was no LPG shortage in the market. The ministry said operators also assured the government at a meeting at the Secretariat yesterday that there would be no LPG shortage. At the meeting, the minister advised operators to maintain adequate stocks, avoid creating supply shortages at the consumer level and refrain from causing public hardship. Owners and senior officials of at least eight to 10 LPG companies attended the meeting.

Omera Petroleum Ltd has been operating in Bangladesh’s LPG sector for a long time. The company is a subsidiary of East Coast Group. Group Chairman and industrial entrepreneur Azam J Chowdhury told Bonik Barta, “I don’t think there’s an import shortage of LPG in the country. But since BERC adjusts prices based on global market pricing, many may take advantage of this to stockpile the product. We can call this an artificial shortage. Operators are always trying to ensure that no LPG shortage develops in the country.”

Operators have always been committed to importing LPG. Even so, top leaders of LPG trade organisations believe the government must take action if a shortage emerges in the domestic market or is created artificially.

Mohammed Amirul Haque, president of the LPG Operators Association of Bangladesh (LOAB), told Bonik Barta, “We don’t see any shortage in LPG imports. The shortage developing in the market is occurring at the levels below operators — distributors, dealers and retailers. This is an artificial shortage. It’s not the operators’ responsibility to resolve it; law enforcement agencies must address the issue at the field level. BERC must monitor the situation. The global and domestic complications affecting LPG imports also need to be resolved.”