The imported liquefied natural gas (LNG) at the transmission end will cost US$17.10, equivalent to Tk 1333, per unit (each thousand cubic feet or MCF).
The officials concerned told UNB that once the LNG is imported and given to consumers, the price will escalate further having accommodated distribution expenses.
With the start of LNG import, according to energy experts, the country's overall energy cost will go up, even to a level of double diminishing the existing business competitiveness though there is no specific plan for utilising the imported gas for any specific sector.
The government is currently buying gas from international oil companies (IOCs) at $2.6 per unit. After mixing its own gas with the purchased one, the average production cost of natural gas stands at $1.6 per unit.
However, the government's latest contract with foreign oil companies was signed fixing the gas price at $5.5 per unit for shallow blocks and $ 6.5 per unit for deep sea blocks.
The official sources said the cost of imported LNG at $17.10 per unit was quoted in a proposal submitted by the Energy Division to the Cabinet Economic Affairs Committee seeking its approval to sign the final contract with a Singapore-based American company for setting up LNG terminal and re-gasification system.
State-owned principal body in the country's hydrocarbon sector, Petrobangla on June 26 this year initialed a term sheet agreement with the Singapore-based Astra Oil and Excelerate Energy Consortium.
The officials said once Energy Division received the Cabinet body's approval, Petrobangla will sign the final deal with Astra Oil to set up the proposed LNG terminal with floating storage and re-gasification unit (FSRU) with 500 million cubic feet per day (MMCF) capacity.
About the LNG proposal, eminent energy expert and head of BUET's Petroleum and Mineral Resources Engineering Department Prof Mohammad Tamim told the news agency that when the imported LNG is supplied to the power plants, the production cost will go up by at least 60 per cent. In some cases, it might be double.
At present, he said, the country's average gas production and supply cost is $1.6 per unit after purchases of gas from the IOCs. The government supplies the gas at $1.0 per unit to state-owned power plants. The gas price is $2.2 per unit for private sector plants, particularly to independent power producer (IPP) plants.
"But when the LNG comes, as per government estimation, this will go up to $4.37 per unit which is just double," Prof Tamim said. If the government does not have a very clear and specific plan about the supply of high-cost imported LNG, then the whole economy will face dilemma in competitiveness with such high-value energy, he added.
He also said when the LNG comes into effect at the consumer level, the per unit electricity tariff will go up to Tk 10 per unit from existing average tariff of Tk 6 per unit.
Prof Tamim said both the prices of Oil, LNG and gas is now declining and in the case of long-term LNG, the price is about $12 per unit. So, before entering into any deal with Qatar, they should rethink about the matter.
"But for a nation like Bangladesh, coal should be the cheaper energy source", he added.
Defending the government stance on LNG import at $17.10 per unit, Energy Division Secretary Abu Bakar Siddique in the proposal said that the country now has a shortfall of 600 MMCFD gas.
"The deficit will further rise against the backdrop of falling gas reserve and also growth in investment in the economy which may lead to a severe gas crisis in the country if there is no alternative arrangement," he said, adding that different countries, including Japan and South Korea, are importing LNG to meet their energy needs.
As per the proposed agreement, Astra Oil will set up the LNG terminal and operate it for 15 years and then hand it over to the Petrobangla. In this case, Astra Oil will deposit $2.0 million to Petrobangla as security guarantee.
The American company has to complete the construction work on the terminal by 16 months from the date of final agreement targeting a tentative commission date of the project in mid 2016.
To utilise the LNG terminal, the government has already signed a memorandum of understanding (MoU) with Qatar to annually import 4.0 million tonnes of LNG to meet the country's growing energy demand.
In this case, it is estimated that each unit of LNG will cost $14 per unit (each 1000 cubic feet) after meeting the freight charge (delivery ex-ship). The LNG terminal operator Astra Oil will charge $0.49 per unit of gas for providing storage and re-gasification service.
After paying taxes and duties, each unit of LNG will cost $17.10 at the transmission end. But when it reaches the user end, the cost will go up further.
To import LNG and supply it to public, the government has to spend a total of $2.7 billion per year as the LNG import will cost $2.58 billion while LNG terminal charge will cost $90.16 million.
The proposal reveals that once the government starts LNG, the gas price has to be adjusted with upward value. In that case, when the imported LNG of 500 MMCFD is mixed with locally produced 2,500 MMCFD gas, the overall gas price will go up to $4.39 per unit. When this gas is supplied to a combined cycle power plant, the power generation cost will stand at Tk 4.37 per unit per unit (kilowatt per hour).
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