Recommendation for registration of distributors and retailers of LPG

Liquefied Petroleum Gas (LPG) cylinders are being sold at a higher price than the price fixed by the government. Since the concerned distributors and retailers are not covered by the registration, proper action cannot be taken in this regard. So more than 4000 distributors and about 50000 retailers need to be brought under registration.

Recently, these things came up in a meeting organized by Bangladesh Competition Commission on LPG price. Considering the overall situation, the Competition Commission decided to conduct a survey on the supply chain and price situation of LPG in that meeting.

The competition commission organized the meeting with all the parties concerned in this sector to investigate the reason why the price of LPG cylinder is being charged Tk 100 to Tk 200 more from the consumers at the retail level even after the government fixed the price. Commission Chairperson Pradeep Ranjan Chakraborty presided over it. Representatives of Bangladesh Energy Regulatory Commission (BERC), Consumers Association of Bangladesh (CAB), LPG operators, distributors and retailers were present.

According to the minutes of the meeting, the representative of MTE Enterprises on behalf of the retailers said that on October 2, the government fixed the price of a 45 kg LPG cylinder at the consumer level at Tk 5,113. But distributors have to buy each cylinder from LPG operators at Tk 4,809. Along with this, the transportation cost is 100 taka and the unloading cost is 10 taka.
He also said that in the current context, the distributor has to buy a 45 kg LPG cylinder from the operators for Tk 4,919. The distributor then sells the cylinder to the retailers for Tk 5,100. Similarly, last September, the government fixed the price of 45 kg LPG cylinder at Tk 4,815 at the consumer level, but the distributors had to buy Tk 4,900 from the operators. Due to higher prices at the operator level, it is not possible to sell each cylinder naturally at the government fixed price at the retail level.

In the meeting, the BERC representative said that last September, the price of a 45 kg LPG cylinder at the operator level was Tk 4,458. The rate set by the government includes VAT and taxes. Dividend fixed by the government from operator to distributor level is 188 rupees. That is, 4 thousand 458 taka fixed at the operator level and 188 taka dividend added, each cylinder is supposed to be sold at 4 thousand 646 taka at the distributor level. Later, with this rate, a dividend of Tk 169 was added to the retailer and it was supposed to be sold at the consumer level at Tk 4,815.

Cab representative said, LP gas was never received by the consumers at the price set by the government. There are three steps to go through in selling LPG cylinders from operator to distributor and distributor to retailer. Increasing the price step by step, the consumer has to bear the additional cost. Apart from this, BERC has not held any public hearing on fixing LPG prices after 2021.

When asked about the registration of LPG operators, distributors and retailers, Chairperson of the Competition Commission Pradeep Ranjan Chakraborty told the meeting that all the operators have taken licences. But while only one of the distributors has a license, none of the retailers are covered by the registration.

It was informed in the meeting that there are currently more than 4000 distributors and 40 to 50000 retailers across the country. As these distributors and retailers have no license, it is difficult to bring them under proper accountability. This may be one of the reasons why the government cannot implement the fixed price in this case. Apart from that, the reason why additional price is kept at the operator level should also be brought under accountability.

BERC and National Directorate of Consumer Protection may take steps to ensure fixed selling price of LPG at the operator level, the recommendation said. BERC can also take steps to bring everyone from distributors to retailers under the register. At the same time the agency can organize public hearing before fixing the price.