Public hearing slams proposed gas price hike

People have criticised the proposed gas tariff hike of 117% at the retail level during a four-day public hearing, which began on Monday at the Biam Auditorium in Dhaka.  

Participants including consumers' representative, CNG station owner, academicians and political leaders, voiced their stance against the price hike move.

They asked the gas supplying companies to reduce the system loss, illegal gas use and gas theft.

At the beginning of the hearing, Bangladesh Energy Regulatory Commission (BERC) Chairman Md Abdul Jalil said that the regulatory body will not make any rash decisions in the struggle of post-Covid-19 economic recovery stage.

BERC is holding the hearing to listen to the arguments from the stakeholders in the gas sector.

At the beginning of the 1st day's hearing, Petrobangla presented its proposal claiming to increase the bulk mix gas price from Tk12.30 per cubic metre of (July-December) to Tk15.30 per cubic metre and retail gas price from Tk9.80 per cubic metre to Tk20.3591.

However, participants at the hearing completely disagreed with the proposal.

Taking part in the argument on the proposal, Energy advisor to Consumers Association of Bangladesh, Professor Shamsul Alam suggested the authority to reduce the financial deficit in the gas by slashing tax-VAT, licensees' profit and all irrational expenses. 

He also proposed the regulatory commission to ask all licensees or companies to run the operation at break-even by cancelling their profit margin until the allegation of gas theft and fraudulence in gas measurement is addressed.

Professor Nurul Islam, one of the most senior energy experts of the country emphasised on learning about the system loss at transmission level.

At present, 2% system loss is allowed in the gas distribution system. But the real system loss is more than 8%, which is more than the LNG that the country imports from the spot market, said a BERC source.

Mahmudul Hasan Manik from Workers Party said that gas price hike will not be needed if system loss is reduced.

"There is no basis for the gas price hike proposal," he said. 

Representative of the Metropolitan Chamber of Commerce said that the gas price cannot be increased because it will disrupt the business.

Geologist Professor Badrul Imam said that gas price hike will be totally irrational at this time when citizen life is already burdened due to skyrocketing prices of daily essentials.

"Bangladesh is considered as a petroleum province but we could not conduct exploration in two-third of the land of our country," he said.

Badrul Imam said that the authorities could stop LNG imports if they conduct workover exploration at in-operational gas wells.

Mohiuddin Ahmed, general secretary at Bangladesh Mobile Phone Customers Association said that the price hike proposal is irrational without shutting illegal gas connections.

"The countrymen are already in a war with the daily essential retailers. Now, the state owned service providing companies are going to start another war with the people by hiking gas prices," he said. 

Earlier, presenting the logic on the bulk gas and retail gas price hike proposal, Petrobangla officials said that due to cost increase in LNG import, double value added tax at import and expenditure hike of the local gas production companies, the price need to be increased.

The purchase price of per cubic metre of gas at Petrobangla end would be Tk15.30 which was Tk12.50 in July-December of 2021-22 fiscal year, if 850 mmcf gas is imported daily.

However, the technical evaluation committee of BERC found out that Petrobangla's required revenue would be Tk12.47 per cubic metre in 2021-22 fiscal year, which is Tk0.03 less than they demanded.

In addition, Petrobangla has earned around Tk2,538crore since August 2018 to June 2021 after bearing LNG import cost.

Therefore, the technical committee asked Petrobangla to back Tk9,227 crore that it took from the Energy Security Fund in the 2017-18 to 2019-20 fiscal year.

GTCL recommended margin hike

In the second half of the day, the 2nd hearing of the day was held on the Gas Transmission Company Limited (GTCL) proposal where it demanded a gas wheeling charge hike by 72%.

At present, the lone gas transmission company gets Tk0.4235 for wheeling per cubic metre of gas. But it demanded to increase it to Tk0.7318 for 2021-2022 fiscal year.

After detailed analysis, BERC's technical committee recommended increasing the wheeling charge by Tk0.06 to Tk0.4890 cubic metre.

As per the schedule, public hearing will be held on the proposals made by Sundarban Gas Company and Pashchimanchal Gas Company will be heard on Tuesday.

As per the gas distributors' proposals submitted back in January, the monthly gas price for a double burner will increase to Tk2,100 from the existing Tk975, while the price for a single burner will rise to Tk2,000 from the current Tk925.

For the last several months, the Energy Division has been under pressure from the finance ministry to collect more revenues by raising gas prices to offset subsidies in the energy sector.

A member of the BERC said Petrobangla currently imports only 5% of its daily consumption from a highly volatile international spot market where it has to buy gas at higher prices.

It imports its 20% gas from two international companies under long-term contracts where prices are static.

"If the local production is raised by 5%, then the country will not need to import the 5% gas from volatile markets at a higher price and finally it would not have to raise the gas price at the retail level," he added.

Normally, the Petrobangla supplies 2,700-3,000 million cubic feet (mmcfd) gas per day of which 2,300mmcfd is produced locally while 600mmcfd is imported as LNG.

Of this imported 600mmcfd, 150mmcfd is imported from the spot market at a variable price between $10 and $30 per unit.