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12 February, 2019 00:00 00 AM

Distributors propose 60pc increase in gas prices

Govt for hiking price to offset LNG import losses
Distributors propose 60pc increase in gas prices

Gas distribution companies of the country have submitted fresh applications to the energy regulator that includes industries, power, fertiliser, households and other customers for a gas price hike of up to 60 per cent. A round of hearing on the price hike is likely to be held before the Bangladesh Energy Regulatory Commission (BERC) next month, The Independent has learnt from various sources.

 A proposal of 60 per cent hike in the retail gas price is going to be made as the government is haemorrhaging money to subsidise the high price of liquefied natural gas (LNG) supplied in the national grid, said a highly placed source.

 The price of domestic gas connection has been proposed to be raised to Tk.1,200 from Tk. 850 for two burners, and Tk. 1,000 from Tk. 800 for a single burner.

 Sources in the Ministry of Power, Energy and Mineral Resources told The Independent that the government had planned to increase the price of gas earlier, but because of the national election, it postponed such an unpopular decision, sources said.

 Now, with the introduction of LNG in the national grid, the government is bleeding money each month. Ministry sources said in one month

(October 2018) the government had lost around Tk. 560 crore in LNG subsidy.

 The government is buying per cubic meter of LNG at Tk. 32 and selling it at Tk. 7.17.

 Officials said that so far the government has spent Tk. 4,400 crore for importing gas and regasification since September, 2018. They are

concerned that the loss will be more than Tk. 1,500 crore.  “As per instructions of Petrobangla, we submitted a proposal, that includes all kinds of customers, to BERC last week,” said Nizam Shariful Islam, managing director of Bakhrabad Gas Distribution Company Limited.

 “The LNG price is high in the international market and if we have to supply gas to every customer as per the demand, more gas will have to be imported, which is costly. So, we don’t have any other option than increasing the price,” he added.

 A distribution company official said yesterday (Monday) that power, fertiliser and CNG customers will face the maximum gas price hike, if the BERC approves their proposal.

 But as per the law, it is not easy to increase the price of gas. The regulator will have to hear from the public on the issue and that could happen next month. But nobody knows when the gas price will be announced.

 “As per the planning, the new price could be implemented from May,” said a government official.

 Bangladesh entered the LNG era in August last year, after LNG brought from Qatar was supplied to the national grid after re-gasification at the country’s first floating, storage and re-gasification unit docked at Moheshkhali.

 In October last year, the energy regulator declared “no increase” in gas prices, and announced to subsidise around Tk. 3,100 crore in the ongoing fiscal to maintain the status quo.

 The BERC chairman, Monowar Islam, then said the gas price hike proposal of gas distribution and transmission companies was on the regulator’s chalkboard. Liquefied natural gas (LNG) was supposed to be blended with piped gas — because of which the average price of gas should have been hiked.

 “It was assumed by the companies that around 1,000 mmcf (million cubic feet) of LNG was going to be added. But in reality, after much dilly-dallying, less than 300 mmcf LNG has so far been added. So, we didn’t feel the necessity of hiking the price,” he said.  

Monowar said the National Board of Revenue’s (NBR’s) decision to withdraw all import, supplementary and customs duties and advance trade VAT (ATV) on LNG also helped them to take the decision of keeping the gas price unchanged.

 The NBR’s move implies that 5 per cent customs duty and 5 per cent advance trade VAT alongside a 93.24 per cent SD on LNG is no longer applicable. “So, such a move by the exchequer has offset the price adjustment needed to minimise the subsidy,” said Monowar.

 “In simpler words, the average unit price of gas is now Tk. 7.17. We needed to increase it by Tk. 1.46 if those taxes and duties were not waved on LNG by the NBR,” Monowar said, adding that a total of Tk. 3,100 crore will have to be given as subsidy in the ongoing fiscal now.



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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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