Fresh move to hike gas tariff

FE Report | Published: June 29, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

The government has moved for a fresh hike in natural gas tariff for the consumers to introduce expensive liquefied natural gas (LNG) in the domestic market.
State-owned Petrobangla has already been asked to place a tariff hike proposal to the Bangladesh Energy Regulatory Commission (BERC), the State Minister for the Ministry of Power, Energy and Mineral Resources (MPEMR) said.
He said the government has also planned to adopt a gas utilisation strategy to provide gas supply to different sectors on priority basis and check its misuse.
Natural gas would not be supplied to the areas and sectors, where it would not be cost-effective, he said.
The Petrobangla inked on Thursday an initial deal with the US consortium of Astra Oil and Excelerate Energy to build the country's first LNG terminal and start importing around 500 million cubic feet per day (mmcfd) by 2016.
LNG prices vary across the world considering the distance between importing and source countries.
The free-on-board (FOB) price of LNG in different source countries is currently within the range of US$12-US$15 per Mcf (1,000 cubic feet), six to eight times higher than the average domestic gas price of around $2.0 per Mcf.
The World Bank (WB) also called upon Bangladesh recently to raise domestic natural gas prices.
"The administered price of domestically-produced natural gas is fixed at a level considerably below that of the international market," said the bank in its latest Bangladesh Development Update.
"Not only does this represent an opportunity cost for the government in lost revenues, but lack of an appropriate price signal leads to inefficiency in allocation and use and limited incentives for further exploration," the WB added.
The government has not raised domestic natural gas prices since August 1, 2009 when tariffs for all types of domestic consumers excluding CNG were raised by 11 per cent.
The Petrobangla in 2012 had sought to raise domestic natural gas prices by up to 103 per cent to meet rising exploration and gas purchasing costs.
But it was asked to re-submit its proposal to the energy regulator via its marketing and distribution subsidiaries with more documentation to justify the request.
The Petrobangla has not yet completed it, said an official. In its proposal in 2012, it had sought the tariff to be increased by 5.24 per cent to Tk 84 per Mcf for power plants.
It proposed to raise the tariff by 9.71 per cent to Tk 80 from Tk 72.92 for fertiliser factories and by 32.60 per cent to Tk 220 from Tk 165.91 for industrial users.
For privately-owned smaller power plants, known as captive power plants, the hike was proposed by 102.94 per cent to Tk 240 from Tk 118.26.
The Petrobangla proposed to raise natural gas tariff by 30.55 per cent to Tk 350 from Tk 268.09 for commercial consumers, by 20.55 per cent to Tk 200 from Tk 165.91 for tea estates and by 39.10 per cent to Tk 905.92 from Tk 651.29 for CNG gas refilling stations.