Biggest ever gas tariff hike likely from July 01

The energy regulator is set to announce the highest ever hike in natural gas tariff next week, which is likely to be effective from July 01.

"We've completed all sorts of formalities to announce a fresh hike in gas tariff soon, which is expected to be effective from July 01," a senior official of Bangladesh Energy Regulatory Commission (BERC) told the FE on Thursday.

The official did not disclose the rate of gas tariff hike but hinted that it could be the biggest ever hike.

State-run Petrobangla and its allied gas marketing and distribution companies proposed raising gas tariff for household consumers by 80 per cent and for consumers of different sectors including power, industry, and commercial clients by up to 211 per cent.

The Commission held public hearings over the tariff hike proposals in March where consumer rights groups, businessmen and left-leaning political organisations protested the tariff hike proposals and sought rooting out corruption, theft and gas pilferage to ensure efficient operations of gas companies.

Officials said over the past one decade, the gas companies asked for raising natural gas tariff at the consumer's end four times, but the Commission raised tariff thrice rejecting once.

In 2009, the gas companies had sought a hike of 65 per cent on an average at consumer ends, but the BERC raised the tariff by 11 per cent.

After six years, the agencies had sought hiking tariff by 40.79 per cent at the end users' level, but the Commission upped it by 26 per cent.

Again in 2017, the gas companies had sought a 95 per cent spike, but the BERC raised the tariff by 11 per cent.

Last year the agencies proposed a 75 per cent hike, but the BERC did not raise tariff for the retail consumers, the official said.

Before 2009, the rate of hike in natural gas tariff was not that significant, the Commission official added.

Justifying the next hike to be the biggest ever, he said the Commission this time would take into cognisance Petrobangla's losses or expenses owing to the import of 'expensive' LNG (liquefied natural gas) from the international market.

Petrobangla has been importing LNG since April 24, 2018 when the first LNG shipment to Moheshkhali Island in the Bay of Bengal arrived.

Currently, Petrobangla counts a monthly loss of Tk 20 billion for importing LNG from international market and selling the fuel at current prices in the local market.

"We're losing Tk 620-Tk 650 million daily for the import of LNG, its regasification and supply to the national grid," said a senior official of Petrobangla.

If this bleeding continues, Petrobangla's annual loss will be around Tk 240 billion or near -triple the Tk 90-billion budgetary allocation as agricultural subsidy for the outgoing fiscal year.

The amount will be around four times the annual subsidy requirement of the state-run Bangladesh Power Development Board worth around Tk 65 billion.

In their latest proposals, which are now pending for BERC decision, the gas companies wanted consumers to pay Tk 1,350 per month for a single-burner stove instead of the existing Tk 750, while a two-burner stove user would have to pay Tk 1,440 per month instead of Tk 800.

The metred household consumers would have to pay Tk 16.41 per cubic metre (one unit) instead of Tk 9.10.

The companies also wished the power plants pay Tk 9.74 per unit of gas instead of the existing Tk 3.16, meaning a 208 per cent hike.

Besides, the fertiliser factories would pay Tk 8.44 per unit instead of Tk 2.71 with a hike by 211 per cent.

For the captive power plants, they proposed increasing gas tariff by 96 per cent to Tk 18.88 per unit from Tk 9.62.

The gas marketing and distribution companies proposed hiking gas tariff by 132 per cent for the industries to Tk 18.04 per unit against the existing rate of Tk 7.76 per unit.

They proposed raising tariff by 50 per cent for the CNG stations to Tk 48 per unit from Tk 32 while hiking 41 per cent tariff for commercial use of gas to Tk 24.05 from Tk 17.04 per unit.

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