CAB questions new LPG prices without hearings

The Bangladesh Energy Regulatory Commission (BERC) has been setting fuel prices, including liquefied petroleum gas (LPG), without public hearings, raising questions about whether it is protecting consumers’ interests.

The issue came up at a discussion organised yesterday by The Daily Star titled “LPG prices: Who is failing the consumer?” at The Daily Star Centre.

The High Court issued a directive on August 25, 2020, requiring BERC to determine LPG prices through public hearings, said M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh (CAB).

BERC held a public hearing on April 12, 2021, but later stopped holding hearings, including for its latest decision on October 4.

Public hearings allow consumers to challenge the costs operators submit for inclusion in regulated prices. At the 2021 hearing, CAB questioned freight charges submitted by operators.

His comments came a day after the parliamentary standing committee on the Ministry of Power, Energy and Mineral Resources raised questions over fuel price hikes without public hearings and capacity payments to power plants.

A member questioned why public hearing regulations had not been framed in the 23 years since the relevant law was enacted.

Another called for a forensic audit to verify power plants’ actual generation capacity and assess capacity payments.

Citing the 2021 example, Shamsul said that 28 companies were involved at the time, and around 10 to 12 submitted freight invoices showing costs of about $120 per tonne.

CAB submitted a document showing a freight cost of $69 per tonne for a shipment through Mongla port, but BERC did not accept it.

Shamsul questioned whether the commission had adequately examined the differences in the proposed costs, arguing that each charge should be supported by evidence before being included in the price calculation.

He also questioned BERC’s response to complaints from LPG distributors.

In a letter dated September 21, the Bangladesh LPG Distributors Association reportedly told BERC and other authorities that suppliers were charging distributors Tk 1,550–1,720 per cylinder against the prescribed rate of Tk 1,475.

The complaint should have prompted a formal investigation to establish whether suppliers were violating the regulated pricing structure, Shamsul said, while calling for an inquiry into BERC’s conduct.

CAB had sought action under Section 11 of the BERC law, including an inquiry through a judicial council, he added.

Contacted, BERC Chairman Jalal Ahmed said the commission had held public hearings twice in 2021, in April and October, before adopting a monthly LPG pricing mechanism based on changes in the Saudi contract price, freight charges, the dollar exchange rate and fuel costs.

Monthly hearings were unnecessary because these factors were largely beyond the commission’s control and had been covered by the decisions taken at the 2021 hearings.

Jalal, who joined BERC in August 2024, said the commission had followed the same process since before his appointment.

He denied that BERC had defied the High Court directive, saying the commission had held hearings as ordered and established the monthly pricing mechanism through this process.

However, Jalal said BERC planned to review dealer and retailer commissions, which were fixed in 2021.

“If we move to revise these, we will certainly hold a public hearing,” he said.

At the seminar, Mohammed Amirul Haque, president of the LPG Operators Association of Bangladesh (LOAB), said BERC sets prices monthly based on international market movements, the Saudi contract price, and other cost components.

“Our price for LPG is not dictated by us,” he said, arguing that BERC determines the regulated rates, including those charged to dealers.

However, Haque acknowledged that consumers are paying 30-40 percent above the official price in the current market.

LOAB had warned operators, distributors and retailers against overcharging and market manipulation.

In a press release issued on September 30, the association called for legal action against anyone found hoarding LPG or selling it above the regulated price.

“My stand is very clear: if any of my operators does anything wrong, take legal steps against that operator, distributor or retailer.”

He urged law enforcement agencies, district administrations and consumer rights authorities to monitor retail markets and take action against violators.

Matheendra De Zoysa, chief operating officer of Omera LPG, said the company sells cylinders at BERC-set prices but has limited control over what retailers charge consumers.

While the company can exercise some oversight over distributors, its influence diminishes further down the supply chain.

He cited Sri Lanka as an example of a country where consumer protection authorities conduct field inspections, operate hotlines and impose substantial fines on businesses selling goods above regulated prices.

Abu Sayed Raza, chief marketing officer of Fresh LPG, also defended BERC’s pricing, saying the rates reflect international market movements, including changes in the Saudi contract price, along with premiums and other costs.

The Saudi contract price rose by 44 percent in April, prompting BERC to set the price at Tk 1,940 for a 12kg cylinder.

For October, the regulator set the price at Tk 1,837, despite a roughly 10 percent increase in the Saudi contract price from the previous month.

The Saudi contract price had risen from around $383 per tonne in July 2023 to $712.50 per tonne in October, Raza said, arguing that the regulated price is not excessive given the increase in international costs.