New industries might have to pay tariff as per the import price of liquefied natural gas (LNG) as the government moves to cut subsidies in the energy sector to boost import of this expensive fuel.
Sources said the Energy and Mineral Resources Division (EMRD) recently decided to send the tariff hike proposal to the Bangladesh Energy Regulatory Commission through the state-run Petrobangla and its subsidiary gas marketing and distribution companies.
As per the proposal, owners of all new industries and captive power plants must pay natural gas tariff as per the total LNG import costs for getting new piped gas connections.
It means, according to market insiders, unlike the ongoing fixed tariff rates, the tariff for new industries would be variable as per the price movements of LNG in volatile international market in addition of applicable VAT and AIT.
New industries and captive plants, which already attained commitments or demand notes from companies for raising gas loads, must pay 50 per cent, or half of the new gas commitments, at current rates.
On the other hand, the remaining half would be paid in accordance with the LNG import prices, spells out the tariff hike proposal.
Besides, the owners of existing industries and plants must pay tariff as per import prices for utilising additional gas above their existing approved loads.
To calculate import prices for fixing tariff, state-run gas marketing and distribution companies will calculate three months' average prices of overall LNG import costs from long-term LNG suppliers and spot LNG suppliers.
Currently, all industries-big, medium, small and cottage alike-are paying gas tariff at Tk 30 per cubic metre, while the price of gas supplied to captive plants is Tk 31.50 for the same.
However, Abdul Awal Mintoo, former president of the Federation of Bangladesh Chambers of Commerce and Industries, opposed the tariff hike move.
Given the current economic situation, any hike in the natural gas tariff would fuel up inflation, he warned.
"We don't want the government to continuously provide subsidy but, at the same time, we don't want see gas pilferage, theft and any wastage," Mr Mintoo told the FE.
According to Petrobangla, it will require Tk 50 billion as subsidy to ensure uninterrupted LNG supplies until December. The amount is in addition to Tk 20 billion given to the supplier until November.
The government provided Tk 60-billion subsidy in fiscal year 2023-24.
The Petrobangla in a letter to the EMRD estimated a deficit of Tk 57.82 billion to import required LNG until December 30.
Unless payment invoices are paid in time, it said, there is a possibility that the suppliers under long-term agreement might stop gas deliveries.
Moreover, master sales and purchase agreement-signing companies, which supply LNG from spot market, may feel discouraged from participating in bidding if payment is disrupted, according to the letter.
According to Petrobangla, its agency incurred loss of Tk 249.81 billion in FY2022 for having to fix LNG-selling price lower than the import cost.
After raising tariff, its loss reduced to Tk 42.87 billion in FY2023.
Until November 2024, Petrobangla had unpaid invoices against eight LNG cargoes and two floating storage and regasification units (FSRUs) totalling $266.70 million or Tk 32.80 billion.
Moreover, it owed some Tk 12.31 billion to the International Islamic Trade Finance Corporation (ITFC) on account of loan instalments.
Sources said industry owners fret over an 'unofficial' embargo on new natural-gas connections to industries in a bid to ease owes of the already-starving gas-guzzling consumers across Bangladesh.
Although there is no official instruction either from the EMRD or Petrobangla to cease new industrial gas connections, gas marketers and distributors are not providing such connections for long, according to market sources.
"Officially, there is no ban on providing new gas connections to industries," said a senior Petrobangla official. "But the boards (of state gas-marketing and distribution companies) are not allowing new connections."
"We'll seek the EMRD's decision on the issue soon," cited the official.
Sources said rampant illegal gas connections across the country during the previous authoritarian Awami League government over the past 16 years have led to the cessation of new gas supplies.
A strong syndicate led by previous government high-ups, local public representatives, top officials of gas-marketing and distribution companies and contractors provided scores of illegal connections by depriving new industries.
azizjst@yahoo.com