DHAKA — Bangladesh’s liquefied petroleum gas (LPG) market is facing supply pressure as shipping and trader premiums for imports have nearly doubled, prompting some importers to scale back new shipments amid rising costs.
The Bangladesh Energy Regulatory Commission (BERC) has set the retail price of a 12-kg LPG cylinder at Tk 1,585 for September. But consumers are currently paying around Tk 2,150, or Tk 565 more than the regulated price.
Retailers say distributors are supplying less LPG than they request, while delivery times have also increased. One retailer said an order for 500 cylinders that was previously supplied in full is now being reduced to about 250 cylinders, with deliveries taking at least seven days.
Importers have informed BERC that shipping costs and trader premiums for LPG have risen sharply. The combined cost has reportedly reached around $300 per tonne, compared with the $160 per tonne incorporated into BERC’s September pricing formula.
Importers said the cost had been between $120 and $160 per tonne last month but has since increased significantly, making some companies reluctant to bring in fresh consignments.
The higher import cost also cannot immediately be passed on to consumers because BERC’s pricing formula currently includes a premium of $160 per tonne. Importers therefore face uncertainty over whether the additional cost of bringing in LPG can be recovered through retail prices.
The retail price has been rising in recent months. A 12-kg cylinder that sold for around Tk 1,800–1,850 over the past two months is now being sold for about Tk 2,150 in some markets.
The pressure comes at a time when many households are already relying more heavily on LPG because of weak and irregular piped-gas supplies.
A resident of Dhaka’s Khilgaon told Bangla Tribune that she paid Tk 2,150 for a cylinder on Thursday, compared with Tk 1,800 on each of her previous two purchases.
A dealer in Hatirpool also said his shop was unable to maintain stocks according to demand because supplies had fallen. Dealers were being told that higher international prices were contributing to the shortage, he said.
For September, Saudi Aramco’s official pricing put propane at $625 per tonne and butane at $660 per tonne. BERC added a shipping and trader premium of $160 per tonne when calculating the domestic LPG price. The LPG used in Bangladesh consists of approximately 35% propane and 65% butane.
However, BERC Chairman Jalal Ahmed rejected the suggestion that the country was facing an overall LPG supply shortage.
He said Bangladesh normally receives between 110,000 and 130,000 tonnes of LPG a month, while imports reached 157,000 tonnes in August and stood at 119,000 tonnes so far in September.
“There is no reason to see a shortage,” he said, while acknowledging that importers had reported the premium rising to $300 per tonne.
According to Jalal Ahmed, the increase could be linked to higher demand. He said there was evidence of rising shipping costs from Saudi Arabia to Japan but questioned whether the increase was as large as reported by importers.
Azam J Chowdhury, former president of the LPG Operators Association of Bangladesh (LOAB) and a businessman, said domestic demand for LPG had increased significantly.
He said the market had previously struggled to fully meet existing demand and that new LPG cargoes were now having to be brought in at higher costs.
“Bringing in LPG at a higher price and selling it at a lower price at a loss is not possible for any businessman,” Chowdhury said, adding that the challenges facing the sector had intensified because of current global market conditions.
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