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No gas price hike for now: BERC

Tariff raising not needed due to low LNG import, says ‘client-friendly’ regulator

FE Report | October 17, 2018 00:00:00

Bangladesh Energy Regulatory Commission (BERC) has kept the existing natural gas tariff unchanged, saying price hike is not necessary now, as the current volume of LNG import is lower than expected.

"State-run Petrobangla and its subsidiary gas companies sought a hike in natural gas tariff, calculating import of LNG to the tune of 1,000 million cubic feet per day (mmcfd)," BERC Chairman Monowar Islam said at a press conference in the capital on Tuesday.

But re-gasified LNG supply is currently hovering around 300 mmcfd, he also said.

The waiver of supplementary duty (SD) and customs duty (CD) at consumers' end as well as lowering of advance income tax (AIT) by National Board of Revenue (NBR) also helped a lot for taking the decision, Mr Islam added.

BERC, meanwhile, lowered the minimum security deposit requirement for industries, captive power plants, and commercial and household consumers through an announcement on Tuesday.

The commission also announced a 0.25 per cent rebate on monthly tariff, if the owners of industries and captive power plants keep their co-generation scheme continuously operational for three months.

During the press briefing at BERC office in Karwan Bazar area, the BERC chairman did not respond to a query on whether the regulator has kept the gas tariff unchanged on 'political consideration' ahead of the upcoming general election.

Mr Islam, however, said the commission has kept the existing gas prices unchanged under articles 22 (kha) and 34 of BERC Law 2003, considering 'overall' issues despite increase in costs for gas production, LNG import, transmission and distribution.

Responding to another query, BERC Member Abdul Aziz Khan said the commission might consider a tariff hike in gas prices in future subject to receiving fresh appeals from the gas companies.

It might happen, if the LNG import volume increases, and oil prices in the international market, which have link with LNG prices, also go upward.

He also termed BERC's latest announcement regarding gas price 'client-friendly', which will also help facilitate green industrialisation in the country.

The non-hiking of gas tariff will cost the government paying subsidy worth Tk 31 billion to Petrobangla during this fiscal year, 2018-19, until June 2019, the BERC chairman said.

Currently the weighted average gas price is Tk 7.17 per cubic metre, and BERC had to increase the price by Tk 1.46 per cubic metre, if the NBR's actions were not there, he added.

Regarding BERC's new minimum security deposit requirement for industries, captive power plants, and commercial and household consumers, he said, they will have to deposit money worth equivalent of two months instead of previous three months.

Besides, industries, captive power plants, and tea-estate consumers will have to keep 50 per cent cash as security deposits instead of previous one-third and two-third cash requirements.

BERC orders will have retrospective effect since September 18, Mr Islam added.

BERC earlier raised the natural gas tariff by 22.70 per cent for all types of consumers in phases with effect from March 01, 2017 and June 1, 2017 respectively.

Petrobangla and its subsidiary gas companies sought raising natural gas tariff to Tk 12.95 per cubic metre from the existing Tk 7.17.

But different rights groups, including Consumers Association of Bangladesh (CAB), protested the tariff hike move, and stressed checking gas theft instead.

Any increase in tariff will impose extra burden on the commoners, they argued.

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