The government is likely to allocate Tk 10,000 crore in the budget for the next fiscal year (2019-20) for subsidising the imports of liquefied natural gas.
Officials said LNG became the new item of the subsidy basket under the budget.
Against the shortage of local gas output, state-owned Petrobangla and local private group Summit are importing LNG, which is being supplied as gas to the end customers at the government-set price.
Finance ministry officials said that the government had released Tk 2,500 crore as subsidy against the LNG imports in the outgoing fiscal year (2018-19).
As the government-set price of LNG is lower than the import prices, the importers need subsidy to recoup the import costs, said a general manager of Rupantarita Prakritik Gas Company Limited.
Quoting Bangladesh Energy Regulatory Commission, he said that the present gap between the sales price and the import price was Tk 1 per cubic metre.
The country’s trade gap might widen if the government does not increase the price of gas in the local market against the backdrop of price hike of LNG in the global market.
According to the Petrobangla, the country imported 596.5mmcf (million cubic feet) of LNG as of May 24, up from 350.5mmcf as of April 24.
The Petrobangla has started importing LNG from Qatar’s RasGas regularly since September 9 last year.
Summit LNG Terminal Co Ltd, a subsidiary of Summit Power International and Summit-Mitsubishi consortium, began supply of LNG in Bangladesh on April 29 this year.
The country’s demand for LNG to be supplied to sectors like industries, power and fertiliser plants would make a steep rise in the coming years against the backdrop of depleting local gas reserves.
It has been projected that the country’s existing gas reserves would run dry by 2038 if no new exploration and discovery takes place.
For subsidising LNG, the overall allocation for subsidy in the next budget is likely to be Tk 42,100 crore, up from Tk 37,804 crore in the outgoing financial year, according to finance ministry officials.
The finance ministry wanted to keep it within 1.5 per cent of the gross domestic product, they said.
The officials said subsidy for power was likely to increase by Tk 300 crore to Tk 9,500 crore.
The food subsidy, which marked a sharp rise in FY19 to Tk 4,604 crore against the backdrop of crop losses, is likely to decrease by Tk 104 crore to Tk 4,500 crore in the next budget.
Finance minister AHM Mustafa Kamal is scheduled to place in parliament the national budget for the next fiscal year on June 13.
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