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SATURDAY, JULY 05, 2025
A proper price formula can help investors to plan big

Analysis

Azam J Chowdhury
28 January, 2023, 11:20 pm
Last modified: 29 January, 2023, 01:06 am

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A proper price formula can help investors to plan big

Azam J Chowdhury
28 January, 2023, 11:20 pm
Last modified: 29 January, 2023, 01:06 am

The ongoing energy crisis and economic issues are not unique to Bangladesh but are common global phenomena. If we look at the neighbouring countries and the European bloc, they are also having a major disruption in energy.

But what needs to be done to overcome our crisis? The problem I believe lies within our policymaking. We could not formulate the right policies that are necessary for our growth and progress.

For example, consumers or businessmen never get the benefit of the price fall of whether it is energy or other products. But in other countries, there is a pricing formula that helps people to plan for investment and business expansion.

In Bangladesh, industrial owners and entrepreneurs suffer from uncertainty as they do not know what is going to happen or what the price of energy will be next year. This is a serious concern for them. So, an automated pricing formula is needed which will be tagged with the global prices.

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Liquefied Petroleum Gas (LPG) is the only industry which has an auto pricing formula, though we entrepreneurs are facing problems with the regulator on the pricing assumption.

If we consider the country's gas demand and supply, we see around 1,000mmcf deficit now. This deficit can be partly mitigated by exploring the marginal gas fields, especially the ones we have already abandoned.

For an energy-hungry country like Bangladesh, a land-based LNG terminal is a specific plant to secure the supply. For the last six and seven years, we have been talking about a land-based LNG terminal in Moheshkhali but it has not been materialised yet.

As per the practice, around 50% or 70% of the supply must be secured from long-term contracts and the rest of the demand can be met by the spot market.

The aim of this practice is to keep us afloat if anything happens in the spot market but when we had the scope to grab more long-term contracts, we went for the spot market.

In the latest gas price announcement, the large, medium and small industries have seen a hike of 155% to 178%. But there is no policy address in the pricing order for the small and medium industries.

In order to keep the employment and economy running, we need to protect the small industry. For that, they need separate energy pricing on the basis of gas requirement. 

Bangladesh Petroleum Corporation is the only operator in the sector since the country's independence and it did not allow any private operators to come into the service. If there is no private participation, then there is no competition and we will not get the desired price.

Azam J Chowdhury, Chairman of MJL Bangladesh and Chairperson of East Coast Group

Economy / Top News

price formula / investors

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