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The Finance Ministry has given its consent to provide Tk 2,000 crore to Petrobangla from the Gas Development Fund (GDF) to import liquefied natural gas (LNG).
According to an official order issued on July 6 by the Energy and Mineral Resources Division, the ministry agreed to provide the fund as a loan to the state-owned company in line with a proposal from the division.
The ministry’s approval has come against the backdrop of the severe fund crisis Petrobangla has been facing following the excessive price hike of gas in the international market as a fallout of the Russia-Ukraine war.
The price of LNG has crossed $39 per MMBtu in the spot market from below $10 after the war began back in February.
Consumers Association of Bangladesh Vice President M Shamsul Alam said the Finance Ministry’s approval is an indication that the government is in a serious crisis in dealing with the energy sector. The Energy Division had recently announced its decision to not import any LNG from the international spot market because of the price hike. As a result, it went for reducing power generation from gas-fired plants and forced the power entities to resort to planned load-shedding.
However, it continued importing LNG from Oman and Qatar under long-term contracts where the price is fixed but varies to some extent on different conditions. It’s not clear whether Petrobangla will use the new fund to resume import of LNG from the spot market or utilise it to import gas from long-term suppliers.
The Gas Development Fund (GDF) was created by the order of the Bangladesh Energy Regulatory Commission (BERC) several years ago to allow Petrobangla to receive additional money with gas bills from the consumers to use the fund for gas exploration in the country.
The BERC also created some other funds by consumers’ additional money and the regulator is highly against the use of such funds for any other purpose than gas sector development.
But all operation of such funds was taken up by the Energy Division. But Petrobangla used some of the funds for different other purposes while deposited to the government exchequer as per a Finance Ministry order.
As per the current arrangement, if the division or Petrobangla wants to use the fund for any purpose, it has to take permission from the Finance Division. The BERC is against the operation and control of the Energy Division on such funds.
Last month, BERC had directed Petrobangla to return a total of Tk 12,227.44 crore to its two original funds — Tk 9,227.44 crore to the Energy Security Fund and Tk 3,000 crore to GDF. The regulator, however, did not specify a deadline.
