Consumers are facing growing distress as government gas supplies fall and LPG prices soar during winter, with the market showing little to no sign of stabilizing.
Despite repeated meetings between the government and LPG suppliers, the market remains uncontrolled. Prices rose further on Sunday, with a 12kg LPG cylinder selling for as high as Tk2,800 in some markets, up from Tk2,200 a day earlier.
To curb the price hike, the Bangladesh Energy Regulatory Commission (BERC) held an emergency meeting with the energy adviser on Saturday evening, followed by a separate meeting between the Ministry of Energy and LPG suppliers on Sunday.
Afterward, the government said there was no justification for a market crisis but, failing to rein in prices, urged traders to regulate the market.
State of government gas
Currently, Petrobangla supplies 2,634 million cubic feet of gas per day. Of this, 931 million cubic feet comes from LNG, while the rest is supplied from domestic gas fields.
Gas supply from local fields has been gradually declining every day. Last year, domestic fields supplied between 2,000 and 2,200 million cubic feet per day. At present, the maximum supply from domestic sources has fallen to around 1,700 million cubic feet—down by 300 to 500 million cubic feet.
On the other hand, the government’s two LNG terminals can supply a maximum of 1,000 million cubic feet of LNG per day. Currently, 931 million cubic feet is being supplied.
With domestic gas supply declining and no further scope to increase LNG supply, the sector has fallen into a crisis. The onset of winter has made managing this crisis even more difficult.
LPG market
Meanwhile, a degree of instability has emerged in the LPG market following the fall of the Awami League government.
A large share of the LPG market was previously controlled by Beximco. After the Awami League’s fall, the group’s top executive has been imprisoned—a fact acknowledged by the government. Following a meeting on Sunday, the Energy Division said many traders reduced LPG imports after August 5 last year.
Monthly LPG demand varies throughout the year, averaging around 120,000 tons.
Operators import LPG based on this estimate. During peak periods, monthly demand rises to 140,000 tons, while in some months it drops to around 100,000 tons.
Humayun Rashid, managing director and CEO of Energypac Power Generation PLC, and president of LPG Operators Association of Bangladesh (LOAB) told Dhaka Tribune that there was no shortage in November.
He said that LOAB estimates LPG imports in December stood at 96,000 tons, while National Board of Revenue data put the figure at 127,000 tons—suggesting there should be no shortage in the market.
However, Humayun Rashid noted that 29 vessels used for regular LPG transportation have fallen under US sanctions, increasing transport costs. Even then, vessels are not always readily available, and operators are seeking alternatives.
Typically, colder weather increases gas consumption for heating and cooking water, pushing up LPG demand between November and February. Sector insiders believe claims by the government and operators that there is no shortage are not entirely accurate.
What the ministry says
After a meeting with LPG traders at the Secretariat, Joint Secretary Mohammad Munir Chowdhury said discussions focused on rising LPG prices.
Citing traders, he said there was no shortage in the market, and imports were adequate, noting that while the government appoints operators, subsequent processes are handled by them.
LOAB leaders raised concerns over difficulties in opening letters of credit and VAT-related issues at the import stage, seeking government support. Chowdhury said the issues were under review.
He added that as the BERC oversees LPG pricing, the ministry has sought a report, including a three-month forecast, to assess market conditions. Chowdhury also said some operators reduced LPG imports after August 5, and the government is considering measures to encourage regular importers to increase supplies.
BERC’s position
Announcing LPG prices for January, BERC Chairman Jalal Ahmed said the commission could not guarantee that consumers would be able to buy LPG at government-set prices.
Referring to vessel shortages in the Middle East, he said LPG imports were being sourced from Singapore-based companies.
He added that BERC sets LPG prices after accounting for all costs incurred by importing companies. Associations have told the commission that they are supplying LPG at the fixed prices.
BERC has also coordinated with the Directorate of Consumer Rights Protection to conduct operations against overpricing. If complaints are received against any company for charging excessive prices, action will be taken, he said.