Supply gaps, price disputes trigger mkt action on LPG
Reza Mahmud :
The government has unveiled both short-term and long-term plans to ensure a smooth supply of liquefied petroleum gas (LPG) and protect consumers from exploitation by unscrupulous traders and syndicates.
The initiative comes amid an ongoing LPG supply crisis and a nationwide strike called by traders threatening to halt sales over pricing disputes. Sources said traders, citing supply shortages and high taxes, had announced plans to suspend LPG distribution from Thursday, 8 January, unless the Bangladesh Energy Regulatory Commission (BERC) revised prices.
In response, the Energy and Mineral Resources Division requested the National Board of Revenue (NBR) on Thursday to reconsider the current VAT and tax framework on LPG imports and domestic production. The move aims to ease supply disruptions and reduce pressure on consumers during a prolonged market strain.
Following a meeting with BERC, LPG traders announced the withdrawal of their indefinite nationwide suspension. The announcement was made by Selim Khan, president of the LPG Traders Cooperative Society Limited, after discussions at the BERC office.
At the meeting, traders demanded an immediate halt to ongoing administrative drives across the country, higher distributor and retailer margins, and measures to ensure uninterrupted LPG supply.
Meanwhile, consumers have long complained that government-fixed prices are largely symbolic, with many unable to purchase cylinders at the stipulated rates. Abdul Ahad, an LPG user in Gandaria, Dhaka, said: “We are compelled to buy LPG cylinders at prices far above government-fixed rates. This has been the scenario for years.”
Energy Adviser Fouzul Kabir Khan confirmed the government’s intervention, saying: “The government has devised short-term and long-term plans to resolve the LPG crisis and protect consumers from dishonest traders. The aim is to make the market competitive and ensure smooth supply.”
According to Khan, the short-term plan involves intensified market monitoring by consumer rights bodies and law enforcement to prevent price manipulation by syndicates. The long-term plan includes the construction of an LPG terminal in Chittagong near Halishohor to strengthen supply infrastructure.
Traders said BERC Chairman Jalal Ahmed assured them that the commission would review administrative drives and initiate legal procedures to revise distributor and retailer charges.
Earlier, LPG traders had declared an indefinite nationwide strike, citing unresolved demands and market disorder. The LPG Traders Cooperative Society Limited had instructed distributors and retailers to halt cylinder lifting from plants nationwide until their demands were addressed.
Traders had also issued a 24-hour ultimatum to BERC during a human chain programme in front of the Jatiya Press Club, warning of stricter action if a new price adjustment was not announced.
Selim Khan criticised the current pricing system, noting that while BERC announces prices monthly, companies often revise them multiple times, leaving distributors to absorb losses. He also called for the formation of a permanent committee to address sector issues and demanded higher commissions for distributors and retailers.
The society noted that although around 55 million LPG cylinders exist nationwide, only about 12.5 million are being refilled, creating a supply gap of nearly 60 percent compared with demand. Rising operational costs and the closure of several companies have left many distributors on the verge of bankruptcy, according to traders.
In a related development, the Energy and Mineral Resources Division has asked the NBR to reconsider the VAT and tax framework on LPG, following Advisory Council decisions and petitions from the LPG Operators Association of Bangladesh (LOAB). Nearly 98 percent of the country’s LPG demand is met through imports handled by private operators, making a balanced tax structure crucial.
The division highlighted that LPG prices typically rise during winter due to global supply constraints and increased local demand, further exacerbated by reduced pipeline gas availability.
The Advisory Council recommended revising the import-stage VAT from the current exemption to a 10 percent rate, while maintaining a 7.5 percent VAT on local production and providing relief at other stages of the supply chain.
The council emphasised that any tax revision should include a thorough assessment of its impact on end-user prices. It directed the Energy Division, Ministry of Commerce, and Internal Resources Division to review the proposal and resubmit it with a clear analysis of consumer price implications.
While LOAB broadly agreed with the council’s discussions, they continue to demand a zero percent import-stage VAT. The Energy Division stressed that a rationalised VAT and tax structure is essential to ensure uninterrupted LPG supply, particularly amid constrained pipeline gas availability.
The developments come as the LP Gas Traders Cooperative Society had announced an indefinite strike starting Thursday, suspending LPG marketing and supply while demanding higher distribution and retail margins.