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2 November, 2019 00:00 00 AM
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LNG import

Petrobangla to seek Tk 10,380cr subsidy

SHAHED SIDDIQUE, Dhaka
Petrobangla to seek
Tk 10,380cr subsidy

Liquefied natural gas (LNG), which was thought to be the lifeline against the impending gas crisis of the country, is turning out as a double-edged sword for the national exchequer. To offset the large import bill of LNG, Petrobangla is planning to ask for Tk. 10,380 crore as subsidy from the government to be able to continue the import of LNG. “We have calculated the subsidy for FY2019–2020 for the import of LNG,” said a senior official of Petrobangla.  

From July 1, the government raised the price of domestic natural gas by a weighted average of 32.8 per cent—the largest hike in the country’s history—at the risk of affecting both household and industry sectors. The decision was taken by the highest policymaking body, as it was thought that the decision would ease pressure on Petrobangla.

However, Petrobangla has already run out of the Tk. 7,000 crore from the Energy Security Fund (ERF), as it needed to pay an import bill of USD 200 million in each month for the six large LNG cargos dispatched in the country’s two LNG terminals.

The government has allocated another Tk. 2,300 crore for the LNG import bill, but the amount is seen as insufficient by the Petrobangla officials.

Sources say that though the biggest distribution companies kept billions of taka as reserves, they are steadily being eaten up by the import of LNG.

“Titas gas company had a reserve of Tk. 5,500 crore in different banks as long-term deposits, but the Bangladesh Energy Regulatory Commission (BERC) instructed the Petrobangla to spend the money to import the high-cost LNG,” said an Petrobangla official.

“We have eaten up Titas gas distribution company's money. Now, we are taking Karnaphuli Gas Distribution Company and

Bakhrabad Gas Distribution Company’s reserves amounting to Tk. 3,500 crore for LNG imports,” he added.  

“Out of the Tk. 3,500 crore, we have only Tk. 2,300 crore in hand to pay the bill for LNG imports,” a source at the government office told the Independent.  Sources say that state-owned Petrobangla plans to ask for Tk. 10,380 crore from the national exchequer.

A Petrobangla official said even after the recent gas price hike in July, the average buying price of gas stands at Tk. 12.50, while the selling price remains at Tk. 9.80. This means, the government is bleeding large sums to subsidise the gas price and hence there is no way but to raise the allocation for LNG imports, he added.

The latest decision to raise the gas price, announced on July 1, allowed Petrobangla to collect Tk. 33,730 crore from  consumers in Y2019–20. But this still falls short of the 75 per cent hike to TK. 12.60/cu m, which would be needed to meet Petrobangla’s estimated LNG import bill of Tk. 43,840 crore.

The decision to increase the gas price was based on the assumption that around 850 MMcf/d of regasified LNG would be supplied to the national gas grid in FY2019–20.

At present, two floating storage and regasification units with a combined capacity of 7.5 million mt/year of LNG, or 1 Bcf/d of regasified gas, are supplying around 600,000 Mcf/d of gas to the grid, as the connecting pipelines are yet to be completed. Bangladesh is set to become a key LNG importer in future, supported by growing consumption and dwindling domestic reserves. S&P Global Platts Analytics forecasted that tge domestic demand for gas would to exceed 6 million mt/year by 2020.

 

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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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