All-SoEs jt venture gas company to fix special tariff structure

FE Team | Published: July 11, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

M Azizur Rahman
The Energy and Mineral Resources Division (EMRD) may fix a special gas tariff structure for the country's first-ever joint venture of the state-owned gas companies to develop Begumganj gas field.
"The tariff structure will be set in such a way that the joint venture project worth Tk 3.0 billion becomes financially viable," a senior EMRD official told the FE.
A committee comprising three stakeholders of the joint venture- Bangladesh Gas Fields Company Ltd (BGFCL), Sylhet Gas Fields Ltd (SGFCL) and Bangladesh Petroleum Exploration and Production Company Ltd. (BAPEX) - is now working to fix the tariff structure.
The committee will finalise the draft tariff structure by next week, which will subsequently be submitted to the Petrobangla and the EMRD for approval.
Sources said refusal by the National Board of Revenue (NBR) to exempt supplementary duty (SD) and value added tax (VAT) for the joint venture Begumganj project has prompted the EMRD to fix the special tariff structure for it.
The EMRD several months back sought SD and VAT exemptions for the joint venture project seeing the exemptions of such duties for international oil companies (IOCs).
Currently the IOCs, in operation in the country, do not pay SD or VAT to the government from their income.
The provisions inscribed in the production sharing contracts (PSC) signed between the Petrobangla and the IOCs have ensured the said benefits for the IOC, a senior NBR official said.
Sources said unlike the tariff structure of other state-owned gas companies the joint venture project might enjoy reduced margin payable to Petrobangla for enhancing its profit margin, he said.
This special tariff structure to develop the Begumganj gas field will, however, not affect the gas tariff for the end users, he clarified.
Currently the NBR charges 55 per cent of the total gas sales from the state-run gas companies as SD and VAT.
Out of the remaining 45 per cent of the gas sales to the consumers the state-run gas companies get their corresponding margins in line with their nature of jobs.
The gas production companies get well head margin, which is now set at Tk 0.25 per cubic metre (CM), distribution companies get distribution margin (Tk 0.24 per CM), while the gas transmission company gets transmission margin (Tk 0.32 per CM).
Petrobangla gets price deficit fund (PDF) margin amounting to Tk 0.317 per CM from every state-run gas company.
As per the current tariff structure the Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) gets only Tk 7.0 per thousand cubic feet (Mcf) from gas sales.