LPG sellers indulging in profiteering
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Tk 1,600-Tk 1,800 in the market,” he said, adding that the companies were selling the bottle for Tk 1,520-1,532 at their mill gates.
DNCRP conducted at least 70 to 80 drives all over the country and found the cylinders of Bashundhara LP Gas, Beximco LPG, Laugfs Gas Bangladesh, Omera LPG, Fresh LP Gas and Sena LPG were selling at inflated prices. These companies are the key players in the private sector-dominated LPG market.
The BERC-fixed rate is mandatory for LPG retailers. “People are not getting LPG at that rate,” Shafiquzzaman added.
At the meeting, representatives of LPG importers, operators, dealers and retailers blamed each other.
“Yes, we sold each cylinder at Tk 1,520… but we didn’t tell the retailers and distributors to sell the products at Tk 1,700 to 1,800. Where is the extra money going?” said Jakaria Jalal, representative of the market leader Bashundhara LP Gas.
The dollar rate, the diesel price, the gas price and the electricity price have increased, but BERC did not factor that into the formula even after the companies sent it several letters, he said, while urging BERC to hold a public hearing to refix the pricing formula.
In response, BERC Secretary Khalilur Rahman said they will hold a public hearing within 15 days to a month if all the companies send documents to support their claim.
“We will not hold a hearing in response to your verbal statement.”
The retail price for LPG will be fixed based on the Saudi contract price, which rose to $790 at the beginning of this month.
“But those consignments are yet to reach the port.”
This means all the available cylinders in the market were bought at the Saudi CP of $599, which they were supposed to sell at Tk 1,232.
“But they hiked the price by themselves [before this month].”
The exchange rate, the diesel price and all other variables were readjusted in the pricing, Rahman said.
Two retailers from the capital’s Khigaon and Agargaon areas shared their experiences in the discussion. They said they need to purchase a 12kg cylinder at Tk 1,550 from different distributors.
“We have another Tk 100 expense at least per cylinder in shop rent, transport fee and staff’s salary. Then how can we sell the product at Tk 1,498?” asked a retailer.
A distributor said that his pick-up vans are waiting at the factory gate for four to five days but are still not getting the cylinders.
Dealers and distributors said that they have only Tk 37 to Tk 38 in profit margin as per the BERC pricing, which is not enough as their cost is upwards of Tk 60-Tk 70 a cylinder.
The shipping cost and premium are higher than last year, said Md Mehedi Hasan, representative of Beximco.
“But it was not adjusted in the pricing formula.”
The shipping fare was $95 per metric tonne earlier, which is now at $120, he added.
“The LC [letter of credit opening] crisis is very deep,” said Mohammed Nurul Alam, the chief executive officer of Meghna Group’s Fresh LPG.
Ships are all set to come but due to the banks’ delay, the products are not coming for now.
“One-third of the month is gone and there is no product here. The crisis is absolute,” he added.
In response, Shafiquzzaman said: “You went to a non-transparent process. You are twisting the price on a small scale, but the impact on the consumers is two-three-fold. There is no scope to sell LPG at an inflated rate.”
Shafiquzzaman said these companies should have been banned for what they have done, but that is not a solution. “LPG is being used all over the country and it is a basic need.”
Bangladesh’s annual LPG consumption is about 14.28 lakh metric tonnes, with households accounting for about 84 percent of the consumption.
Around 99 percent of the market is dominated by 29 private companies.