LafargeHolcim Bangladesh Ltd, multinational cement manufacturing company, will have to pay an outstanding gas bill of around Tk 902.50 million to state-run Jalalabad Gas Transmission and Distribution Systems Ltd (JGTDSL) in accordance with a court's verdict.
It will have to pay Tk 100 million along with regular bills within one month and the remaining amount will have to be paid in quarterly instalments of Tk 100 million.
The company will pay the pending bills in line with a verdict of the Appellate Division of the Supreme Court, according to the company statement posted on the Dhaka Stock Exchange website on Monday.
LafargeHolcim will have to pay the gas bills as per the tariff set by Bangladesh Energy Regulatory Commission (BERC) and the JGTDSL will maintain supplying gas to the company as per the terms of Gas Sales Agreement (GSA).
"It's a great win for us as we were fighting to collect the pending gas bills as per the rate set by the BERC from the company for years," JGTDSL managing director Md Harunur Rashid Mollah told the on FE Monday.
Sources said the cement company has been consuming around 16 million cubic feet per day (mmcfd) of gas in total of which it consumes 12.30 mmcfd to run boiler for cement production and remaining 3.70 mmcfd to run a captive power plant at the factory site.
LafargeHolcim was earlier paying gas tariff in line with the GSA signed between the JGTDSL and the then Lafarge Surma Cement Ltd 15 years ago in January 2003.
It has been paying Tk 7.91 per cubic metre as gas tariff against its gas consumption from the JGTDSL, which was the ceiling price at US$2.8 per Mcf (1,000 cubic feet) as set in the GSA between the two companies.
As per the court verdict, the cement factory will have to pay almost double tariff at Tk 13.85 per cubic metre to run its captive power plant and Tk 10.70 per cubic metre for gas consumption in the cement factory.
Meanwhile in a statement on Monday, the company said its board of directors passed a resolution on Sunday to comply with the court's order.
Subject to fulfilment of the conditions, it said, JGTDS shall maintain supply of gas to the company under the GSA.
Earlier on February 3 last, the board approved invocation of clause 21 of the GSA to commence arbitration proceeding with JGTDS as a dispute has arisen between the parties in relation to the price of gas.
It said the order has been passed by the Appellate Division in the context of arbitration application no. 5 of 2021 filed by the company before the High Court Division for interim protection so that the gas supply is not stopped during pendency of the arbitration proceeding.
The dispute between the parties under the GSA will be determined by the Arbitration Tribunal, and the court's order will not have any impact on the merits of the dispute that will be adjudicated by the Arbitration Tribunal.
If the Arbitration Tribunal passes an award in favour of the company, the company will be entitled to recover or adjust, in terms of the award, the disputed amount paid to JGTDS by the company in compliance with the above stated order of the Appellate Division.
The company will provide updates to the regulatory authorities and shareholders, as and when required, in conformity with applicable laws.
LafargeHolcim Bangladesh Ltd, previously known as Lafarge Surma Cement Ltd., is a joint venture of LafargeHolcim, a world leader in building materials and Cementos Molins group of Spain.
It was incorporated on 11 November 1997 as a private limited company in Bangladesh under the Companies Act 1994.
Subsequently, on 20 January 2003, it was made into a public limited company.
The company is listed in both Dhaka and Chittagong stock exchanges.
Stock price of LafargeHolcim fell by 4.82 per cent to close at Tk 59.30 per share in Dhaka Stock Exchange following the news of the court verdict on Monday.