Decision on gas price hike likely by end of June

Public hearing on gas price hike ends

Staff Correspondent | Published: 00:42, Mar 15,2019 | Updated: 01:09, Mar 15,2019

 
 

The public hearing before the Bangladesh Energy Regulatory Commission on proposal for gas price hike ended on Thursday with the commission’s technical evaluation committee claiming that import of liquefied natural gas would increase gas production cost by 73 per cent by October.
Technical committee member and commission deputy director Kamruzzaman in the hearing said that the final decision on the proposals for gas price hike might be made after final assessment of the production cost at the end of the ongoing financial year.
‘The commission will think over the proposals neutrally and logically,’ said commission chairman Monowar Islam in his concluding remarks on the four-day hearing at Trading Corporation of Bangladesh auditorium in Dhaka.
Petrobangla, the state-run Oil, Gas and Mineral Resources Corporation, and its seven subsidiaries proposed 80, 211, 208 and 132 per cent gas price hike for household use, power generation, fertiliser production and industrial use respectively.
The current average production cost at the consumer level for a cubic metre gas was fixed at Tk 8.63 by the commission in October 2018.
Fixing the average selling price at Tk 7.17 per cubic metre, the commission had said that the rest of the cost was to be covered by the government in subsidy and from energy security fund.
The gas companies alleged in the hearing that the government gave no subsidy rather borrowed huge amount of money from them for infrastructural development projects at very low interest rates leaving them in an impending liquidity crisis.
The companies argued that their revenue demand would increase steadily following increase in LNG import and the import would reach 1000 million cubic feet per day by April.
Till the date, the gas companies were mostly handling only 320 MMcfd LNG on an average, which was supposed to be 500 MMcfd in accordance with the initial projection they made immediately before Bangladesh began importing LNG in August 2018.
The commission technical evaluation committee estimated that the existing gas distribution expenditure would increase by 64 per cent if the companies handled 650 MMcfd LNG, which would not happen before in May.
In that case the existing distribution expenditure would need to be re-fixed at Tk 11.77 from Tk 7.17 per cubic metre, said Kamruzzaman.
He said that the distribution expenditure was expected to rise by 73 per cent to Tk 12.43 in October, when the LNG import was expected to reach 800 MMcfd.
‘We are alarmed by all these numbers and projections,’ said Bangladesh Mobile Phone Consumer Association president Mohiuddin Ahmed.
‘We hardly understand the numbers. Still we can make out of it a future of rapidly rising gas price,’ he said.
Communist Party of Bangladesh leader Ruhin Hossain Prince argued that an increase in gas price became only a matter of time the moment the government decided to import LNG instead of expanding exploration of indigenous sources.
‘The government stepped in a trap of a syndicate of dishonest businesspeople and their agents,’ he said.
‘Perhaps the price will not increase immediately. But this is for sure that the government is testing the ground,’ he said.
People would not bear the consequences of decisions taken in complete disregard for public interest, he said.
On Thursday, Karnaphuli Gas Distribution Company Limited and Pashchimanchal Gas Company Limited placed their proposals in the hearing where fewer consumer rights activists and energy experts attended compared to previous days.
Consumer rights and energy experts accused the commission of violating law by holding the hearing.
They said that the proposals did not have merit to be discussed in the public hearing.
Bangladesh CNG Filling Station and Conversion Workshop Owners Association’s Bogra-Rajshahi zone general secretary Mizanur Rahman Ratan said that many of his colleagues would quit business if gas price was increased again.
He said that over 20 per cent of revenue generated from gas sale came from CNG refuelling stations and the entire sector was at stake.
National Human Rights Commission employee Nazma told the hearing that most of the middle and low income people could not afford yearly rise in gas price.
Since 2009, according to accounts given by the commission chairman in the hearing, gas price rose by 48 per cent at the user level in three phases.
The highest 26 per cent rise came in 2015 against the demand for 40.79 per cent.
Bangladesh Islami Andolan on Thursday demonstrated outside TCB building protesting against the hearing.
They threatened to lay siege to the energy ministry if the commission decided to increase gas prices as it would increase daily life expenses of people.

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