Petrobangla to pass on high cost of LNG to consumers

State-run Petrobangla would propose to raise natural gas tariff next week, aimed at passing a portion of the imported LNG cost on to the consumers.

"We're working on it with a target of submitting the proposal to the energy regulator by the first week of March," Petrobangla chairman Abul Mansur Md Faizullah told the FE Tuesday.

The import of LNG (liquefied natural gas) is expected to be expensive and substantially increase the cost of natural gas supply in the country.

The price hike would be required to meet the increased cost of gas after LNG imports, said the chairman.

Petrobangla has already sent the proposal separately to its large consumers like Bangladesh Power Development Board (BPDB) and Bangladesh Chemical Industries Corporation (BCIC).

When contacted, BPDB chairman Khaled Mahmood acknowledged getting the proposal. "We shall soon discuss the issue of increased costs," he said.

According to a Petrobangla estimate, the government would require US$ 844.20 million (Tk 69.22 billion) in one year to import around 1,000 million cubic feet per day (mmcfd) equivalent of LNG and its re-gasification (in two under construction FSRUs -- floating, storage and re-gasification units).

It would require $600 million more to import around 600 mmcfd of LNG in a year through three proposed small scale FSRUs to be built at offshore Sangu platform and adjacent to already built jetties on the river Karnaphuli owned by Chittagong Urea Fertilizer Company Ltd (CUFL) and Karnaphuli Fertilizer Company Ltd (Kafco), said a senior official.

Petrobangla estimated the LNG purchasing cost to be $7 per million British thermal unit (MMBtu) at CFR (cost and freight).

Bangladesh Energy Regulatory Commission (BERC), in its tariff hike order on August 27 in 2015, had constituted an 'energy security fund (ESF)' to meet the import cost of LNG and building LNG terminal while implementing other relevant projects to ensure energy security.

The commission then created the fund considering 'consumers' benefit' at a weighted average of Tk 1.01 against per cubic metre of natural gas, said a senior official at the BERC.

The regulator recently approved spending money worth Tk 69.22 billion from the ESF, which is already deposited, to meet the LNG import and terminal related costs, said a senior official of Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR).

In September 2017, Petrobangla had prepared a draft proposal with almost doubling the natural gas tariff for different consumers like fertiliser, industries, commercial, and captive power plants.

Petrobangla then proposed to raise CNG (compressed natural gas) price by 61.56 per cent to Tk 51.70 per cubic meter (cu m) from existing Tk 32 cu m.

For household consumers, it sought a hike by Tk 2.10 per cu m to Tk 11.20 per cu m.

For commercial consumers, the tariff hike proposed to be Tk 35 per cu m from existing Tk 17.04 per cu m and, for industries, the tariff proposed to be Tk 14.98 per cu m from Tk 9.62 per cu m.

For electricity generation, the cost proposed to be Tk 4.99 per cu m from existing Tk 3.16 cu m.

Tariff for tea gardens as estimated by Petrobangla is set to see a hike to Tk 12.10 per cu m from existing Tk 7.42 per cu m.

Petrobangla chairman, however, said the draft of the proposal would be modified before submitting it to the BERC.

Energy adviser of Consumers' Association of Bangladesh (CAB) Professor M Shamsul Alam criticised Petrobangla over sending the tariff hike proposal to the selected industrial consumers. "It is the BERC having the authority to raise the tariff," he said.

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