The Financial Express

Bangladesh government may raise gas price

| Updated: October 15, 2021 17:41:08

Bangladesh government may raise gas price

The government is considering a fresh gas-tariff hike to "offset losses" being incurred through the purchase of expensive LNG from the volatile international market, now on the cusp of global reopening.

State-run Petrobangla is now readying a comprehensive proposal to seek formally an upward adjustment of gas tariffs from the energy regulator, a senior energy official told the FE Thursday.

"We are calculating total costs, expenditures, and other related issues relating to LNG (liquefied natural gas) imports to prepare the proposal," said a senior Petrobangla official about the arithmetic of the new hike, hot on the heels of LPG- price raise.

The petroleum corporation and its subsidiary gas companies might place the gas- tariff proposal with Bangladesh Energy Regulatory Commission (BERC) within the next weeks, he said.

The officials would not tell the extent of tariff hike that the state-run gas companies would seek but said that around a 15-per cent raise is the target.

The BERC last raised the gas tariffs by 32.8 per cent on average with effect from July 1, 2019, marking the biggest-ever hike so far.

The gas-tariff hike over two years back was the first hike after the initiation of LNG import by the government from the international market.

Petrobangla started regular import of LNG on September 9, 2018 -- in the wake of the natural gas crunch, which is attributed to a prolonged slow pace in exploration of the hydrocarbons in the country's potential fields.

The weighted average natural gas tariff is now Tk 9.80 per cubic metre following the latest hike, which was Tk 7.38 per cubic metre previously.

Petrobangla is now struggling to make payment against gas purchases from locally operational international oil companies (IOCs) and LNG purchases from global suppliers as domestic gas tariffs are much lower compared to the purchase costs, said sources.

The volatile international LNG prices have already pushed the government for a pause in LNG purchase until December after three cargoes costing record-high prices.

Petrobangla purchased a 138,000-cubic-metre LNG cargo from spot market in September at US$28 per million British thermal unit (MMBTU) from Vitol Asia Pte Ltd.

It also bought two LNG cargoes at record-high rates of $35.89 per MMBTU and $36.95 per MMBTU from Vitol and Gunvor for early-and late-October delivery.

The prices are over threefold the price Petrobangal pays in purchasing LNG from long-term suppliers, averaging around US$10.50 per MMBTU.

The Brent crude-linked LNG price for Petrobangla was below US$6.0 per MMBTU in October last year.

Currently, household consumers having single-burner stoves are paying Tk 925 per month, which was Tk 750 before, while the double-burner users are paying Tk 975 instead of the previous Tk 800.

The metered household consumers are now paying Tk 12.60 per cubic meter, which was Tk 9.10 previously.

Fertiliser factories counted the highest hike in tariffs during the last hike by 64.20 per cent to Tk 4.45 per cubic meter from the previous Tk 2.71.

Compressed natural gas (CNG) price in retail level is now Tk 43 per cubic meter, which was Tk 40 two years back.

Natural gas tariffs for small and cottage industries under commercial sector were kept unchanged at Tk 17.04 per cubic meter last time.

Captive power plants counted a tariff hike by 43.97 per cent during the last hike to Tk 13.85 per cubic meter from previous Tk 9.62.

Natural gas tariff for power plants was hiked by 40.82 per cent to Tk 4.45 per cubic meter during the previous hike from Tk 3.16.

Industrial consumers are now paying Tk 10.70 per cubic meter, up from Tk 7.76 previously.

Natural gas tariff for hotel and restaurants under commercial consumers' segment was hiked by 34.97 per cent to Tk 23.0 per cubic meter from the previous Tk 17.04.

For tea estates, the tariff was fixed at Tk 10.70 per cubic meter from the previous Tk 7.42.

The regulatory commission on energy back then had raised gas tariff considering an inflow of around 850 million cubic feet per day (mmcfd) of re-gasified LNG (RLNG) to national gas grid.

Petrobangla could collect around Tk 86.20 billion annually from the gas-guzzling consumers, said sources.

Before July 2019, the BERC previously had raise natural gas tariffs by 22.70 per cent on average for the consumers in March 2017.

In September 2015, the commission had hiked the average gas tariffs by 26.29 per cent.

Previously the tariff was hiked by 11.22 per cent in 2009.

[email protected]

Share if you like