Across Bangladesh, the sale of liquefied petroleum gas (LPG) has come to a virtual standstill, leaving households and businesses struggling amid an acute supply disruption. In response, the interim government has announced a significant reduction in the value-added tax (VAT) on LPG, both for imports and domestic production.
On Thursday, 8 January, the Ministry of Power, Energy and Mineral Resources issued a formal notification outlining the new tax structure. Under the directive, VAT on imported LPG will be reduced from 15% to 10%, while VAT on locally produced LPG will be cut to 7.5%.
The decision follows extensive consultations between the government’s Energy and Mineral Resources Division and the LPG Operators Association of Bangladesh. Officials stated that the primary goal of the tax adjustment is to lower consumer prices and ensure a stable supply of fuel across the country.
According to sources, the proposed VAT restructuring is expected to have a direct positive impact on household expenditure, helping ordinary consumers cope with rising energy costs. The move is also intended to stabilise market conditions, which have been severely disrupted by recent supply shortages.
| LPG Type | Previous VAT | New VAT |
|---|---|---|
| Imported LPG | 15% | 10% |
| Locally Produced LPG | 15% | 7.5% |
The announcement comes at a critical time, as LPG suppliers had halted sales and distribution nationwide, starting from the morning of 8 January. Retail outlets report that cylinders are entirely unavailable, leaving hotels and restaurants to rely on alternative cooking methods, while many households are unable to cook altogether. Consumers have expressed frustration at being “held hostage” by the sudden disruption.
Industry insiders suggest that the VAT reduction may encourage suppliers to resume operations and improve availability in the short term. Meanwhile, authorities have indicated that monitoring mechanisms will be put in place to prevent hoarding and speculative pricing, which have exacerbated the recent crisis.
The government emphasised that this measure is part of a broader effort to safeguard essential energy supplies, protect consumers, and mitigate the economic strain caused by surging energy costs. Analysts believe that, if implemented effectively, the VAT cut could provide immediate relief to millions of households while stabilising the domestic LPG market in the months ahead.