CNG price doubled after four years

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M Azizur Rahman
The government Thursday nearly doubled the price of compressed natural gas (CNG) to Tk 16.75 per cubic meter from Tk 8.50 to offset losses by state-owned Petrobangla.
The new rate, to be effective from today (Friday), comes almost four years after CNG started to become popular to run motor vehicles despite the prices of oil more than doubled during the same period, the energy ministry said.
"Upward adjustment of CNG price has become a must as Petrobangla has been incurring huge losses by selling CNG much below the price than it buys," Special Assistant to Chief Adviser on energy M Tamim told the FE Thursday.
"Despite the price hike, CNG would still remain the cheapest fuel in the country. Its price is less than half of diesel and a quarter of petrol and octane," he said.
The government began to promote CNG as an alternative to petroleum products in 2004 to drastically reduce its fuel import bill, which last year hit US$2.3 billion.
The price of CNG was kept at least one-fourth of diesel, so that the motor vehicles start using gas, instead of imported oil. Since then at least 135,000 motor-vehicles have been converted into CNG-powered ones.
The rapid increase in CNG use has already eased pressure on fuel import bill but the government said it added woes for Petrobangla whose losses mounted for subsidising the prices.
Officials said every month the increased use of gas now saves the country Tk4.00 billion from import bill, but critics including the multilateral lending agencies said the low price has mostly managed to subsidise the rich, who don't need it.
"The cheap CNG has benefited the rich most. Almost all of them now use gas to run their cars and gas-guzzling Pajeroes, Lexuses etc," Tamim said.
Tamim said the price hike would now lead to increased fares for CNG-run three-wheelers and taxicabs.
"The communication ministry has planned to increase fares of the CNG three wheelers and taxicabs proportionately to the increased gas rates," he said.
There are now more than 20,000 CNG-run three-wheelers and taxicabs in the country, and already some of them have started charging abnormal fares following the announcement of new CNG rates.
He, however, ruled out any increased fares for CNG-run buses and trucks, "as these have been charging much higher fares compared to their fuel costs for long."
A diesel-run bus spends Tk 10-12 on fuel to travel a mile, while a CNG-ruin bus has to spend only Tk 2.00-2.50 to go to the similar distance, the energy ministry said.
"Yet, from the beginning, the CNG-powered buses have been charging equal rate or more than the diesel run buses, depriving the people from the benefits of government-subsidised cheap fuel," it added.
The increased fares also saw thousands of CNG run buses, cars, three-wheelers and taxicabs queuing in front of the CNG stations to fill up the gas-cylinders the last time with old rates.
Energy Secretary Mohammad Mohsin said increased rate would ensure Petrobangla an additional income of Tk 3.30 billion a year.
The CNG price was last raised to Tk 8.50 per unit from Tk 7.45 on July 1, 2004, which was one-fourth of Octane price of Tk 35 per litre in the local market, a senior energy ministry official said.
Though the Octane price was raised to Tk 67 a litre in April 2007, the CNG price was left unchanged.
The margins of the CNG filling stations have also been increased from Tk 6.03 per unit to Tk 6.78 to encourage more CNG stations across the country.
The energy ministry also made setting up standby generators compulsory for all the gas stations within the next eight months, the energy ministry said, adding it would ensure continuous services at the stations
Currently there are 229 CNG filling stations in the country. Among them 99 are in Dhaka, 16 in Savar, 27 in Gazipur, two in Manikganj, three in Narsingdi, nine in Narayanganj, 12 in Comilla, five in Feni, three in Kishoreganj, 13 in Sylhet, 29 in Chittagong, six in Bogra, one in Brahmanbaria, two in Tangail, one each in Pabna and Laxmipur.