Brace for a record hike in gas prices

The government is set to pass the burden of the expensive imported gas cost on to consumers, forcing people to pay a record additional amount for the use of same quantity of gas from the first day of the new fiscal year.

The announcement is likely to come in the first week of July, according to officials in the Bangladesh Energy Regulatory Commission (Berc) – the government agency responsible for setting gas and electricity prices, among other things.  

“We are working on the proposals of Petrobangla and its associated gas transmission and distribution companies on gas price adjustment,” Rahman Murshed, a member of Berc, told The Business Standard.

He, however, did not mention any date for announcing the new tariff but said, “we will announce the order (new tariff) once all assessments are done.”

A number of Berc officials seeking anonymity said the upcoming gas tariff hike is going to be the highest till date, as the commission is accounting for Petrobangla's rising expenses owing to the import of expensive LNG from the international market.

Petrobangla has been importing Liquefied Natural Gas (LNG) from West Asia since April 2018 when the first LNG shipment arrived in Moheshkhali Island in the Bay of Bengal. They started supplying gas to the national grid in August - a delay by four months due to technical glitches.

Currently, Petrobangla - a state-owned company responsible for exploring, producing and selling natural gas and other mineral resources - counts a monthly loss of Tk 2,000 crore for importing LNG from the international market and selling the fuel at current prices in the local market.

The government spends a sum of Tk 39 per cubic metre of imported LNG, which is selling in the local market for Tk 7.17 on average.

In the past decade, gas companies asked for higher tariff at the consumers’ end on four occasions. Berc increased the gas price thrice and refused to do so once.

In 2009, the gas companies sought a hike of 65 percent on average, but Berc raised the tariff by 11 percent.

Six years later, the commission upped the tariff by 26 percent against a proposal of 40.79 percent rise.

The gas companies again in 2017 sought a 95 percent spike, but Berc raised the tariff by 11 percent.

Last year the authorities rejected a proposal of raising the price by 75 percent.

In January this year, Petrobangla and its associated gas marketing and distribution companies submitted their proposals to the Berc seeking a rise in tariff for all kind of users.

They sought minimum 50 percent to maximum 211 percent increase in the gas tariffs.

In the latest proposals, the gas companies wanted consumers to pay Tk 1,350 per month for a single-burner stove instead of the existing Tk 750, while a two-burner stove user would have to pay Tk 1,440 per month, instead of Tk 800 at present.

For the metred household consumers, the proposed price is Tk 16.41 per cubic metre (one unit), instead of the existing Tk 9.10.

The companies also wanted the power plants to pay Tk 9.74 for per unit of gas instead of the existing Tk 3.16, meaning a 208 per cent hike.

Fertiliser factories will have to pay Tk 8.44 per unit, instead of Tk 2.71, with a hike by 211 per cent if the proposal goes through.

For the captive power plants, they proposed increasing gas tariff by 96 per cent to Tk 18.88, from Tk 9.62 per unit.

For industries, the gas marketing and distribution companies proposed raising the tariffs by 132 per cent to Tk 18.04 per unit, against the existing rate of Tk 7.76.

They sought 50 per cent rise for the CNG (compressed natural gas) stations, to Tk 48 per unit, from Tk 32, while hiking 41 per cent tariff for commercial use of gas to Tk 24.05 from Tk 17.04 per unit.

In March, the Berc held public hearings on the proposals.

In the hearings, consumer rights groups, businesspeople and left-leaning political parties protested the tariff hike proposals and called for rooting out corruption, theft and gas pilferage to ensure efficient operations of the gas companies.