The government mulls over investing a significant sum of money to be mobilised through increased natural gas tariffs in development of infrastructures for liquefied natural gas (LNG), liquefied petroleum gas (LPG) and hydrocarbon exploration, officials said.
Ensuring future energy security is the prime goal, they said supporting the raise, which received protests from different stakeholders and opposition as well as a section of ruling party politicians.
The country's energy regulator will be issuing a directive to ensure the use of the revenue to be generated from the raised gas tariffs, a senior official told the FE Saturday.
Some preferential energy projects, including the strengthening of the capacity of state-run Bangladesh Petroleum Exploration and Production Company Ltd (Bapex), are also to benefit from the surpluses.
The directive, which would be a part of the tariff-hike order, would be issued by the Bangladesh Energy Regulatory Commission (BERC) next week, the Bapex official said.
The commission Thursday increased the natural gas and power tariffs on average by 26.29 per cent and 2.93 per cent respectively for retail consumers with effect from September 1 next.
Around Tk 34.05 billion would be added every year to the government exchequer with the increased natural gas tariff alone, said a commission official.
"We have raised gas tariff not to increase the profitability of state-run gas- marketing and-distribution companies," the commission official said explaining.
The commission in its decree is set to elaborate on the mechanism to use the increased revenue to support building necessary infrastructure for use of the alternative energy sources in the wake of fast depletion of natural gas reserves.
Officials said the government has set a target to initiate supply of natural gas to consumers from 'expensive' imported re-gasified LNG by 2017 to meet mounting demand in industries, power plants and fertiliser factories.
It has been working to build several terminals to import LNG for use. A significant portion of the money from the increased tariff of natural gas is set to be utilised to build LNG terminal and import re-gasified LNG, commission sources said.
Money from the increased tariffs might also be used to carry out oil-and-gas-exploration activities by Bapex.
The option for providing subsidy to LPG sector for keeping its prices rational is also under the commission's plan for usage of the additional revenue, they added.
The commission first had diverted funds from increased natural gas tariffs by creating the gas development fund (GDF) in August 2009, when it hiked gas rates by around 11 per cent.
Back then, the BERC had tagged a condition that additional revenue generated from the gas-tariff hike would be used for gas-sector-development projects after creating the GDF.
Currently the GDF has around Tk 60 billion, which is being utilised to carry out gas exploration, drilling of exploratory, development and work-over wells, conduct seismic programmes, construct gas-transmission pipelines, install process plants etc to augment natural gas supply, officials claimed.
Under the BERC-approved policy for the GDF, repayment against unsuccessful exploration activities would not be necessary.
In no way the state-owned entities can extract any sum of money as dividends or operating income from the fund, it spells out.
Creation of the gas-development fund was necessary to improve the country's ailing energy sector as it could not carry out significant gas exploration and development activities over the past decade only for lack of sufficient funds, said industry-insiders.
The government should judiciously select the companies and projects on the basis of competition for spending the public money, they added.
Petrobangla officials said due to insufficient fund allocation to the local companies, their shares in the country's total gas output fell drastically over the past years compared to those of the international oil companies (IOCs).
Bangladesh currently produces around 2,700 million cubic feet per day (mmcfd) of natural gas, of which around 52 per cent is being produced by the IOCs.
mazizur.rahman@outlook.com
