The Financial Express

Industrial consumers may negotiate gas price

Energy Div drafting policy

| Updated: August 23, 2019 14:53:51

Evaly and Fianancial Express Evaly and Fianancial Express
Industrial consumers may negotiate gas price

The country's bulk consumers of gas may have negotiable tariff structure for the fuel under a proposed government gas allocation policy.

The government may enter into an especial sales agreement with bulk consumers in future, a senior official of the energy and mineral resources division told the FE on Thursday.

The official, however, did not elaborate on the type of consumers to be brought under such an arrangement.

Currently the government has separate gas sales agreements with some fertiliser and cement factories including the Karnaphuli Fertiliser Company Ltd and LafargeHolcim Bangladesh Ltd.

Under the agreement, which is separate from the energy regulator's fixed tariff structure, the gas-guzzling enterprises are able to purchase natural gas at a negotiated price viewed as win-win for both parties.

These bulk consumers entered into such agreements with state-owned gas marketing and distribution companies before the establishment of the Bangladesh Energy Regulatory Commission (BERC), the energy regulator.

After the establishment of the Commission, no such deals were signed and all the consumers have to consume gas at the commission-fixed rates, said a senior Petrobangla official.

The government is drafting the policy to allocate natural gas on a priority basis to consumers considering their contribution to the overall economy.

The industrial sector is expected to get topmost priority, followed by fertiliser factories and power plants.

Gas connections to industries having efficient equipment and located inside special economic zones will have the priority under the draft "Natural Gas Allocation Policy 2019."

The issues like increasing number of vehicles using electricity, battery and LPG (liquefied petroleum gas) or auto-gas instead of CNG (compressed natural gas) will also be brought under consideration, said the senior official of the division under the Ministry of Power, Energy and Mineral Resources.

The government has been working on prepare the policy to ensure efficient use of natural gas, which is now being blended with expensive re-gasified LNG (liquefied natural gas), he said.

Under the policy, the electricity sector, including captive power plants, will not be able to consume more than 50 per cent of the country's overall natural gas output.

Currently, the power sector consumes around 60 per cent of the overall natural gas output, said the official.

Vice president of the Federation of Bangladesh Chambers of Commerce and Industry Siddiqur Rahman welcomed such a policy and sought quality and uninterrupted gas supplies to industries, which can boost output.

"As natural gas is now pricier, the government should provide electronic volumetric corrector (EVC) machines to check 'ghost' gas bills under the policy," Mr Rahman said.

In July, the government hiked gas prices on average by almost a third triggering protests from businesses and left parties.

He, however, expressed satisfaction with the current natural gas supply situation, saying, "Industries are getting gas connection smoothly."

Under the policy, the government will introduce the use of modern metering in natural gas production, transmission and distribution along with LNG imports.

An annual calendar will also be developed considering the demand for LNG imports and natural gas production.

The government will also encourage private sector to import LNG alongside the government, under the policy.

Currently, gas connection to CNG filling stations has been suspended fearing a drop in CNG consumption in future and increased use of auto-gas as an alternative.

Gas connections to households and commercial consumers are on hold.

New gas connections to captive power plants are also being discouraged.

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