Tamim for readjustment of energy prices
FE Report | Sunday, 15 June 2008
Special Assistant to the Chief Adviser Dr. M. Tamim Saturday supported readjustment of energy prices, albeit at an affordable level, and claimed that the subsidy provided to gas, power and diesel benefited only 5.0 to 10 per cent of the population.
"The government should readjust energy prices at an affordable level of people taking into consideration the availability and sustainability of the same", Dr. Tamim, who is in-charge of the ministry of power, energy and mineral resources, told a seminar organized by the Forum for Energy Reporters, Bangladesh (FERB) at the national Press Club.
The government would have to incur loss if it sells gas below Tk 150 per unit at the consumers' level, he said.
Petrobangla purchases gas from the state-owned companies at Tk 7.0 per 1,000 cubic feet, or one unit, and at around Tk 192 per unit from the international oil companies (IOCS). Its average selling price of gas is around Tk 93.
According to an initial estimation, it was found that BAPEX will not able to sell gas extracted from new fields below Tk 60-70 per unit. Even at that price, the government will have to suffer huge losses, he said.
Energy secretary Md. Mohsin, Power secretary Fouzul Kabir Khan, Petrobangla Chairman Jalal Ahmed, energy experts Quamrul Islam Siddiqui, Badrul Imam, Izaz Hossain, among others attended the meeting.
M. Tamim said in 1998 per barrel price of oil used to cost $10 but that price has shot up to more than $130 in 2008, showing a sharp 1350 per cent rise.
"Price volatility of fuel oils has discouraged a number of investors to invest in oil extraction and exploration since then. Such a trend might continue up to 2009. There is speculation about the decline in fuel prices in the international arena," he said.
After the US presidential election later this year, the situation might ease, he said, adding that low gas price in Bangladesh compared to that in the international market prices remains as a disincentive for foreign investment in this sector.
Although there is a spin off effect of subsidy on the economy, but it should be within limit and in a realistic form, he said.
"We have to find out actual beneficiary of subsidy provided for power, gas and diesel," he said adding that an estimated that about 5-10 per cent of the population is benefited by such subsidy.
Power Secretary Fauzul Kabir Khan said: "Additional 800-1000 megawatt (MW) power could be added in the national grid by the end of this year."
The power ministry is working on the development of 'merchant' power policy and energy conservation act to increase energy efficiency, primarily concentrating on renewable energy, he said.
Energy Secretary Md Mohsin said: "Dependency on fossil fuel should be reduced with more emphasis on the use of alternative sources."
On coal policy, he said apart from government's delay in decision-making, experts are yet to come up with any concrete opinion on the coal policy.
Petrobangla Chairman Jalal Ahmed said: "The Petrobangla, once a profitable organisation, has been incurring a monthly loss of about Tk 800 million as it is selling gas at prices much lower than its purchasing prices."
Petrobangla currently supplies around 1,670 million cubic feet of gas daily to the national grid, of which it takes around 733 mmcfd from the IOCs and the rest from its subsidiaries.
"We are now facing problems to pay gas bills for the month of May and the current month due to fund crisis," he said stressing the need for readjustment of gas prices.
"The government should readjust energy prices at an affordable level of people taking into consideration the availability and sustainability of the same", Dr. Tamim, who is in-charge of the ministry of power, energy and mineral resources, told a seminar organized by the Forum for Energy Reporters, Bangladesh (FERB) at the national Press Club.
The government would have to incur loss if it sells gas below Tk 150 per unit at the consumers' level, he said.
Petrobangla purchases gas from the state-owned companies at Tk 7.0 per 1,000 cubic feet, or one unit, and at around Tk 192 per unit from the international oil companies (IOCS). Its average selling price of gas is around Tk 93.
According to an initial estimation, it was found that BAPEX will not able to sell gas extracted from new fields below Tk 60-70 per unit. Even at that price, the government will have to suffer huge losses, he said.
Energy secretary Md. Mohsin, Power secretary Fouzul Kabir Khan, Petrobangla Chairman Jalal Ahmed, energy experts Quamrul Islam Siddiqui, Badrul Imam, Izaz Hossain, among others attended the meeting.
M. Tamim said in 1998 per barrel price of oil used to cost $10 but that price has shot up to more than $130 in 2008, showing a sharp 1350 per cent rise.
"Price volatility of fuel oils has discouraged a number of investors to invest in oil extraction and exploration since then. Such a trend might continue up to 2009. There is speculation about the decline in fuel prices in the international arena," he said.
After the US presidential election later this year, the situation might ease, he said, adding that low gas price in Bangladesh compared to that in the international market prices remains as a disincentive for foreign investment in this sector.
Although there is a spin off effect of subsidy on the economy, but it should be within limit and in a realistic form, he said.
"We have to find out actual beneficiary of subsidy provided for power, gas and diesel," he said adding that an estimated that about 5-10 per cent of the population is benefited by such subsidy.
Power Secretary Fauzul Kabir Khan said: "Additional 800-1000 megawatt (MW) power could be added in the national grid by the end of this year."
The power ministry is working on the development of 'merchant' power policy and energy conservation act to increase energy efficiency, primarily concentrating on renewable energy, he said.
Energy Secretary Md Mohsin said: "Dependency on fossil fuel should be reduced with more emphasis on the use of alternative sources."
On coal policy, he said apart from government's delay in decision-making, experts are yet to come up with any concrete opinion on the coal policy.
Petrobangla Chairman Jalal Ahmed said: "The Petrobangla, once a profitable organisation, has been incurring a monthly loss of about Tk 800 million as it is selling gas at prices much lower than its purchasing prices."
Petrobangla currently supplies around 1,670 million cubic feet of gas daily to the national grid, of which it takes around 733 mmcfd from the IOCs and the rest from its subsidiaries.
"We are now facing problems to pay gas bills for the month of May and the current month due to fund crisis," he said stressing the need for readjustment of gas prices.