Home ›› 29 Mar 2022 ›› Front
The state-owned Petrobangla pledged to deliver 850 mmcfd of LNG in accordance with the new price set in 2019, but failed to make it while consumers had to bear the burden of extra cost.
The gas price shot up by 32 per cent to Tk 9.70 per unit on average in 2019, arguing that the import cost of LNG is high.
As a result, general consumers have since been paying extra for LNG just as those who are not getting enough gas.
In the three years, the extra cost accounted for about Tk 50,000 crore – equivalent to one-year total expenditure in the country’s gas sector.
The information has been obtained by analyzing the data from Petrobangla during the public hearing of the new proposal for gas price hike. The hearing was held from March 21 to March 24 in the capital.
Following the hearing, Bangladesh Energy Regulatory Commission (BERC) asked the state-owned company to account for the money spent as an extra cost on gas by the consumers.
However in 2019, Petrobangla said the government did not provide enough subsidies (Tk 2.89 per unit) that it wanted for LNG imports. It had to import LNG at the expense of customers. As a result, less than the promised LNG had been brought.
Energy expert Prof Shamsul Alam appealed to the BERC to take disciplinary action against the state-owned company, calling the matter a consumer rights violation.
He told The Business Post that the average gas price was hiked to compensate for 850 mmcfd LNG import, but about 500 mmcfd was imported instead.
The cost came down on the heels of import of less amount of gas, but on the other hand, consumers had to foot the bill higher in proportion, said the expert.
“Firstly, the customers paid more for LNG. In addition, they paid for gas even though they did not get it due to shortage.”
Originality vs Reality
According to the estimate provided by Petrobangla, the technical committee of Bangladesh Energy Regulatory Commission made the proposal of gas price hike for new adjustment during the public hearing.
As per the report, before the gas price hike on July 1, 2019, Petrobangla said it would supply 850 mmcfd of imported LNG daily due to domestic gas shortage, and because of the high cost, gas prices have to be adjusted at the consumer level.
The annual flow of gas was supposed to be 8,785 million cubic meters. Petrobangla had given the same calculation in the new proposal for gas price hike.
But the record of Gas Transmission Company Limited (GTCL) shows that its
transmission lines received 5,836 million cubic meters of LNG in FY 2019-20 and 5,140 million cubic meters in FY 2020-21.
In the ongoing fiscal, GTCL received 3,020 million cubic meters of gas so far.
Petrobangla estimated 7,831 million cubic meters of gas for the whole year, but the BERC estimated it to be 6,041 million cubic meters.
That means if LNG was supplied as estimated in these three fiscal years, the total amount of fuel would be 26,355 million cubic meters. However, if the current year’s estimates are calculated, LNG will be 18,809 million cubic meters.
In the meantime, the government is in trouble with the import of LNG as its price has reached a record high.
As a result, Petrobangla has brought 7,547 million cubic meters less than promised in three years. This is more than one year of LNG imports. If calculated, the current market price of LNG would be about Tk 50,000 crore.
Experts said the government collected the extra price from the consumers without giving them this huge amount of gas in return.
Asking not to be named, a BERC member told The Business Post, “In 2019 Petrobangla said the average price was increased on the basis of 850 mmcfd of LNG import. As a result even though gas did not come, the consumers paid the price. That is why we have asked Petrobangla to account for this money.”
Petrobangla Chairman Nazmul Ahsan told The Business Post the government was supposed to subsidize 850 mmcfd of LNG imports at the rate of Tk 2.89 per unit at that time, but failed to pay the amount. “As a result, we have coordinated with the issue, claiming that there was no such thing as cheating consumers out of their hard-earned money,” he said.
Petrobangla under pressure
At present, the price per unit of gas in the country (domestic and LNG combined) is Tk 12.60, but at the consumer level it sells on average at Tk 9.70. The government was supposed to pay a deficit of Tk 2.89.
According to the BERC, the total expenditure on LNG import in Fiscal Year 2018-19 was Tk 11,742 crore. The income from the sale was Tk 7062 crore.
Besides, the government subsidized Tk 2,500 crore. In that year, the deficit of Petrobangla was Tk 1,060.36 crore.
In FY2019-20, the total expenditure on LNG import was Tk 18,150 crore while the sale was 16,461 crore. That year the government subsidized Tk 3,500 crore.
Petrobangla had a surplus of Tk 1,611 crore in FY20, but this year, it has shown an estimate of Tk 440,000 crore for LNG imports. In the meantime, it demanded Tk 32,0000 crore from the Energy Division, but the government has given only Tk 4,000 crore.
Petrobangla Chairman Nazmul Ahsan said: “We have not enough money but the country has been facing gas shortage. We are under a lot of pressure to buy LNG at high prices.”
On March 24, State Minister for Power, Energy and Mineral Resources Nasrul Hamid told the journalists that the gas price totally depends on the subsidy of the finance ministry.
