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Public hearing on gas tariff hike

Petrobangla proposal faces stiff opposition

Published : 21 Mar 2022 09:37 PM

Petrobangla has proposed to hike gas prices at around Tk 11 per cubic metre, while Gas Transmission Company Limited (GTCL) proposed to increase its wheeling charge by Tk 0.44 per cubic metre.

However, technical committee of Bangladesh Energy Regulatory Commission (BERC) has recommended gas prices and wheeling charge be increased by Tk 3.11 and Tk 0.06 per cubic metre.

The proposal and recommendation came at a four-day public hearing on Monday. 

Bangladesh Energy Regulatory Commission (BERC) is holding the hearing, led by its Chairman Abdul Jalil, at the BIAM Auditorium in the city from 10 am to 5 pm everyday on March 21-24 to listen to the arguments from the stakeholders in the gas sector.

Petrobangla proposed to hike gas prices to increase its revenue allocation for purchasing gas from public and international companies as well as import LNG from abroad.

Petrobangla said the wholesale cost of gas per cubic meter will be Tk 15.30 this year. That is why it has proposed to increase it to Tk 20.35. However, the BERC Technical Evaluation Committee thinks the cost will be Tk 12.47.

Currently, each cubic metre of gas is priced at Tk 9.36. According to the committee the prices can be raised to Tk 12.47. In other words, the technical committee recommended to increase the price of gas by Tk 3.11 per cubic meter.

The technical committee in its report showed that 99.46 million cubic feet of R-LNG is being imported daily from the spot market, which is about 3 percent of the total gas. In the outgoing year, the cost of gas has come down by Tk 2.40.

Energy experts said that the price of gas from other sources has remained unchanged while the price of gas has gone up by 3 per cent. Consumers are in favour of not raising prices at this time.

Energy adviser of CAB Professor Shamsul Alam said that Petrobangla did not get any information. In such a situation, taking part in the public hearing does not make any sense. What could be the meaning of not giving them information?

He said, the energy division had multiple options. Instead of trying to recover, they wallow in their sadness and thus, experience more failure.

On the other hand, GTCL has proposed to increase the wheeling charge from Tk 0.42 to Tk 73 in the current financial year and Tk 0.86 in the next year. The BERC Technical Evaluation Committee has recommended it to fix the tariff at Tk 0.48 per cubic meter.

A four-day public hearing on the proposed gas tariff hike of 117% at the retail level began on Monday.

As per the gas distributors' proposals submitted back in January, the monthly gas price for a double burner will increase to Tk 2,100 from the existing Tk 975, while the price for a single burner will rise to Tk 2,000 from the current Tk 925.

At the beginning of the hearing, BERC Chairman Md Abdul Jalil said that the regulatory body would not make any rash decisions in this regard.

In his inaugural address, BERC Chairman Abdul Jalil said that the GDF (Gas Development Fund) was formed with people's money and the government had taken Tk 3,000 crore from it. It needs a proper explanation in that regard. 

‘Currently, the system loss of gas transmission and distribution line is above 8 percent, which is higher. Nowhere in the world is it more than 2 percent. System loss should be at an acceptable levels,’ he added.

The BERC chairman said ‘the companies' reports did not address the social impact. Assessing social impact makes decisions easier. The technical committee did not raise it in the same way. The global situation has had a huge impact on food, fuel and fertilizers. A public hearing is being held due to legal obligations as the companies have applied for price hike. The information will be finalised through evidence and reasoning. Under no circumstances will anything unjust be done.

Meanwhile, the proposals made by Sundarban Gas Company and Pashchimanchal Gas Company will be heard on Tuesday, Titas Gas and Bakhrabad Gas companies on Wednesday, and Jalalabad Gas and  Karnaphuli Gas companies on Thursday.  

After the conclusion of the hearing, the watchdog body will announce its decision within 90 days.

Official sources said Petrobangla and its seven subsidiary bodies submitted the proposals to raise gas prices at the bulk and retail levels following the directive of the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources.

A member of the BERC said Petrobangla currently imports only 5% of its daily consumption from a highly volatile international spot market where it has to buy gas at higher prices. It imports its 20% gas from two international companies under long-term contracts where prices are static.

"If the local production is raised by 5%, then the country will not need to import the 5% gas from volatile markets at a higher price and finally it would not have to raise the gas price at the retail level," he added.

Normally, the Petrobangla supplies 2,700-3,000 million cubic feet (mmcfd) gas per day of which 2,300mmcfd is produced locally while 600mmcfd is imported as LNG.

Of this imported 600mmcfd, 150mmcfd is imported from the spot market at a variable price between $10 and $30 per unit.