LPG imports slide, prices spike
Bangladesh is facing renewed pressure in its liquefied petroleum gas (LPG) market as declining imports and tighter global supplies have pushed domestic availability about 30 per cent below demand, driving the price of a 12-kg cylinder above Tk2,000 in many areas.
The shortage has emerged amid higher international LPG prices following the escalation of the Middle East conflict, with importers reporting reduced supplies despite existing contracts.
Traders fear the situation could worsen next month if global prices and supply constraints persist.
Data from the National Board of Revenue (NBR) show that around 158,000 tonnes of LPG were imported in August by 13 private companies. In September, nine companies had imported LPG, with total imports reaching 119,000 tonnes as of 22 September.
According to the Bangladesh Energy Regulatory Commission (BERC), 52 companies hold licences to operate in the LPG sector, of which 32 have their own cylinder-filling plants.
Although 23 companies are authorised to import LPG, only eight or nine regularly bring in the fuel.
Traders said even companies with import contracts were receiving 30-40 per cent less LPG than usual, while supplies in the open market had also declined.
Global prices squeeze market
BERC had set LPG prices based on an import cost of US$160 per tonne. The international price has now risen to between $260 and $400 per tonne, making imports significantly more expensive.
With supplies tightening, traders said rationing had become necessary to maintain market availability.
The government-owned sector accounts for only about 1 per cent of Bangladesh’s LPG market, leaving the private sector responsible for almost all supplies.
A shortage also emerged last December after private-sector imports fell during the final three months of the year, prompting the government to take steps towards direct LPG imports.
On 20 January, the Energy and Mineral Resources Division authorised Bangladesh Petroleum Corporation (BPC) to import LPG, subject to three conditions.
Between February and July, suppliers were invited on five occasions, but no company expressed interest.
On 4 August, Speed Marketing offered to supply LPG on its own initiative and was subsequently awarded a contract under the direct procurement method to supply 5,000 tonnes.
However, the timing of the shipment remains uncertain. The imported LPG will be supplied to authorised private operators for distribution through their own marketing networks.
Cooking fuel under pressure
The LPG shortage is particularly significant because of the fuel’s widespread use for household cooking.
New residential piped-gas connections have been suspended since 2015, leading to rapid growth in LPG consumption. Annual demand has reached around 1.5-1.6 million tonnes, with nearly 10 million consumers using LPG.
About 80 per cent of LPG consumed in Bangladesh is used for household cooking, while the remainder is used mainly in transport and industry.
BERC adjusts LPG prices monthly. On 2 September, it cut the official price of the widely used 12-kg cylinder by Tk13 to Tk1,585.
Consumers, however, are paying an additional Tk500-Tk600 in many areas. The Directorate of National Consumers’ Right Protection has been conducting market drives and imposing fines on traders.
During the severe shortage last December, the price of a 12-kg cylinder rose to as much as Tk3,000 in some parts of the country.
Traders wary of further disruption
LPG prices reached a record high in Bangladesh in April following the spread of the Middle East conflict.
The price of a 12-kg cylinder increased by Tk387 at the beginning of April and by another Tk212 on 19 April.
Prices subsequently declined for two consecutive months in June and July, before fluctuating over the following three months.
The market is now facing renewed instability. Some retailers have kept their shops closed amid fears of enforcement action over prices above the official rate, according to traders.
They warned that further closures could disrupt supplies and deepen the shortage.
BERC Chairman Jalal Ahmed said the regulator had received complaints for several days about unusually high LPG prices.
“There is a risk of enforcement drives during a shortage. If retailers close their shops, supplies could decline further,” he told the media.
He said imports were continuing normally for now, but concerns remained over whether supplies could be maintained without interruption.
“Some traders may therefore hoard LPG and reduce supplies to the market. We are monitoring the situation regularly,” he said.
With international prices substantially above the benchmark used for domestic price-setting and import volumes showing signs of renewed weakness, the LPG market faces continued uncertainty over both supply and consumer prices.
