Uninterrupted supply of import-dependent liquefied natural gas (LNG) until this month-end will cost some Tk 50 billion in state subsidy as Petrobangla seeks the money before long, officials say.
The amount is in addition to Tk 20 billion given to the state-run gas-and-oil supplier until last month.
In the last fiscal year, the government gave Tk 60 billion as LNG-import subsidy to the Oil, Gas and Mineral Corporation or Petrobangla.
The Petrobangla authority in a letter to the Energy and Mineral Resources Division, which was forwarded to the Finance Division late last month, estimated that the shortage of funds to import required LNG until December 30 will stand at Tk 57.82 billion.
"Payment of LNG-cargo-import cost will face uncertainly unless the government pays subsidy," the letter reads-incidentally at a time when the post-uprising interim government gasps under accumulated financial burdens of yesteryears.
The corporation further mentions that unless the payment invoices can be paid in time, there is a possibility that the suppliers under long-term agreement can stop delivering the liquid gas.
Moreover, the master sales and purchase agreement (MSPA)-signing companies, which supply LNG from spot market, may feel discouraged from participating in bidding if payment is disrupted, it has said in the alert note.
The suppliers may also encash standby letters of credit if invoices cannot be paid off in time. Also, if payment is delayed, there is an obligation of paying interest at the rate of LIBOR-plus 5.0 per cent which is also quarterly compounded.
According to Petrobangla officials, the agency incurred Tk 249.81 billion worth of financial loss in the fiscal year 2021-22 for having to fix LNG-selling price lower than the import cost. Moreover, due to gas-price hike on the international market by 80 per cent in February last year it incurred loss worth Tk 42.87 billion in fiscal year 2022-23.
In that two fiscal years the state agency faced a total loss of Tk 292.68 billion which it met by spending money from energy-security fund, government subsidy, gas-development fund, and retaining earnings of companies under it.
Until November 18 this year, the corporation had unpaid invoices against eight LNG cargoes and two floating storage and regasification units (FSRU) totaling $266.70 million or Tk 32.80 billion, for which it already asked the banks to make payment.
Moreover, it owed some Tk 12.31 billion to the International Islamic Trade Finance Corporation (ITFC) on account of loan installment.
While the total debt was Tk 45.11 billion, the Petrobangla had a balance of Tk 15.78 billion in its bank account, it mentions in the letter.
Contacted, a finance-division official told the FE that the subsidy requirement of Petrobangla has been growing every year.
"We are under tremendous pressure from the Intentional Monetary Fund to lessen subsidy and incentives while Petrobangla's demand is growing constantly," he said about what feels like to be on the horns of a dilemma.
The official notes that public-sector expenditure has to be lowered by any means as revenue earnings not rising as expected.
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