As distributors overcharge, govt plans to sell LPG directly to consumers
Distributors say BPC’s limited supply makes it hard to cover costs under the regulated price
In response to overpricing by distributors — sometimes up to Tk450 per 12.5-kg cylinder — the government now plans to supply liquefied petroleum gas (LPG) produced by the Bangladesh Petroleum Corporation (BPC) directly to consumers, officials said.
A 12-kg LPG cylinder produced by private companies is priced at Tk1,431, while BPC's cylinder is set at Tk825 but often sold for more.
"BPC sells its cylinder to distributors at just Tk784, but they charge Tk1,000 to Tk1,350 — a markup of Tk200 to Tk450 above the regulated price," said a BPC official, requesting anonymity.
He said this pricing anomaly, driven by distributors, is undermining the government's goal of providing LPG at a reasonable cost.
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However, distributors claim that BPC's LPG supply is insufficient, and they cannot cover expenses such as shop rent and trade licence fees by selling at the regulated price.
The BPC is now preparing to bypass distributors, and a policy is being drafted to make this plan a reality, said its Chairman Md Amin Ul Ahsan.
"We aim to deliver LPG directly to consumers, especially in gas-producing areas where new residential connections aren't being granted. The ministry has decided to allocate LPG to regions like Sylhet, Bhola, Brahmanbaria, Jamalpur, and Begumganj. Affordable LPG will be distributed via state gas companies under district administration oversight. We expect to implement this policy within two months," he told TBS.
Energy Adviser Fouzul Kabir Khan said, "Our goal is to ensure the benefits reach consumers. To that end, LPG will be supplied to consumers in gas field areas under government supervision."
How the govt LPG supply chain works
According to BPC, LPG is produced as a byproduct during crude oil refining at Eastern Refinery Limited (ERL).
LP Gas Ltd, the state-owned LPG bottling and packaging company, converts this refinery gas into usable cylinders. It operates two major plants — one in North Patenga, Chattogram, and another in Golapganj–Kailashtila, Sylhet. The finished cylinders are then supplied to BPC, which handles marketing and distribution.
These cylinders are collected by 3,101 registered distributors through four BPC subsidiaries: Padma Oil Company Limited, Meghna Petroleum Limited, Jamuna Oil Company Limited, and Standard Asiatic Oil Company Limited, who then sell them to consumers.
BPC produces around 120,000 to 130,000 cylinders of 12.5kg LPG annually, which is just 1.66% of the country's yearly demand.
Officials say distributors receive only small quantities, which they sell at higher prices. BPC lacks an enforcement team and must rely on law enforcement agencies.
What distributors say
While not openly admitting to selling LPG above the fixed price, Khorshed Ur Rahman, president of the LPG Distributors Association in Chattogram, told TBS that BPC's LPG gas supply does not meet distributors' demand. Due to limited sales, distributors struggle to cover costs, which may lead some to charge higher prices.
He also pointed out that LP Gas Limited lacks modernisation, with no capacity expansion and many cylinders being quite old. These concerns are being overlooked.
An internal BPC investigation recently revealed this overpricing issue. The report noted that BPC's LPG distributor recruitment and marketing policies are outdated and need revision to address the current realities. Besides, the price gap between government and private LPG cylinders should be narrowed so that middlemen can no longer exploit consumers.
To reduce consumer costs, cylinders could be sold directly to customers through government depots or sales offices, supervised by customer cards, the report recommended.
