The Government says the raise is required to cushion high import cost of LNG; higher cost of business feared
Government on Sunday raised the prices of gas despite repeated opposition voiced by the consumer rights groups.
The hiked prices for eight categories, including that of household users, are made effective from Monday.
Bangladesh Energy Regulatory Commission (BERC) held mass hearings on gas price hike twice, in June last year, and March this year, but took a long time issuing the price increase circular.
The decision came at a time when five out of the six gas distribution companies are already making profits with the existing price rates. But the government justified the decision to hike on the pretext of adjusting the high import price of liquefied natural gas (LNG).
Gas prices were last increased on March 1 in 2017.
According to the latest decision, the new weighted average prices of gas at the consumer level is Tk9.8 a cubic foot, 32% increase from Tk7.38.
Under the new decision, the monthly gas bills for both single-burner, and double-burner cooking stoves will stand at Tk925, and Tk975 respectively, which is a 23.33%, and 21.87% increase respectively.
The existing bills for household single and double burners are Tk750, and Tk800 per month respectively.
BERC earlier held a four-day public hearing from March 11 on the proposals placed by seven state-owned companies, Gas Transmission Company Ltd, Titas Gas Transmission and Distribution Company Ltd, Bakhrabad Gas Distribution Company Ltd, Jalalabad Gas Transmission and Distribution System Ltd, and Karnaphuli Gas Distribution Company Ltd.
The price hike
The fertilizer sector saw the maximum hike, with the prices of each cubic foot gas set to Tk4.45, seeing a 64.2% rise from Tk2.71.
Tea industry is the second on the list with a 44.2% increase to Tk10.7, up from Tk7.42, followed by captive power for which each foot of gas costs Tk 13.85 causing a 43.97% rise.
The power sector saw the fourth highest rise of 40.82% to Tk4.45, with the gas prices for household users having meters shooting up to Tk12.6 through the 38.46% rise.
The price for the industry sector was a significant jump of Tk2.94 or 37.88%, to Tk10.70. Under the commercial category (eateries), around 35% hike has been imposed. The small, and middle enterprise under the same category ‘luckily’ managed to escape a hike in gas prices.
The CNG sector registered a 7.5% hike, to Tk43, up from Tk40 set in 2017.
What the government says
The state minister for power, energy and mineral resources has repeatedly been claiming that the government was mulling over ‘adjusting’ the expensive liquefied natural gas (LNG) prices.
He reiterated that the increase of gas prices cannot be termed a hike.
On June 9, Nasrul Hamid said the government would require an additional Tk14,000 crore subsidy for LNG imports if the gas price was not hiked again.
At that time, he also said, about 600 million cubic feet of LNG had been added to the national grid as of now, and another 600 million cubic feet would be added later.
According to the Bangladesh Oil, Gas, and Mineral Corporation, better known as Petrobangla, the country has a daily demand of 3.70 billion cubic feet (bcf) gas, whereas the supply is around 2.70 bcf gas, and the demand is gradually growing.
Considering the situation, the Energy and Mineral Resources Division has started importing LNG from Qatar.
Bangladesh received the maiden supply of regasified super-chilled fuel item on August 18 last year, after the maiden consignment of LNG reached Moheshkhali, Cox's Bazar, from Qatar on April 24.
Considering the overall situation, the government signed the deal with Qatar to import 2.8 million tons of LNG annually for the next 15 years.
Bangladesh is also in talks with several other countries for importing LNG. A report by Copenhagen-based research firm Ramboll says, Bangladesh will need annual imports of about 30 million tons of LNG by 2041, in order to meet rising demand for energy in the country.
A Petrobangla official, seeking anonymity, recently said, they need to adjust the price of imported liquefied natural gas (LNG), which costs around Tk33 per unit in its super chilled form. After re-gasification, and being mixed with local gas, each unit of the LNG is priced at Tk8.51.
“We want the tariff to be hiked as we have to provide a Tk27,000 subsidy to the gas companies taking into consideration, the 1000 mmcfd LNG import in the near future,” he said.
The government currently supplies only around 520 mmcfd of LNG but the price hike is based on the projected import.
About the profit being made by the gas companies, he said: “It is true that they are making a profit now, but that has nothing to do with the import of LNG.”
Reaction over the hike
Consumers, different right bodies, and their representatives have over the past two years, repeatedly urged government not to hike gas price. Business community also voiced serious concern that hike in gas prices would push up the cost of business. They raised their voices during public hearings organized by BERC in June last year, and also in March of this year.
Left Democratic Alliance (LDA), a platform of eight left-leaning parties, protested the price hike, demanding that it be withdrawn.
Meanwhile, Ganosamhati Andolan has announced that it would stage demonstration over the government decision in front of the National Press Club in the afternoon on Monday.
Between June 11 and June 21 last year, there was a similar hearing, and back then BERC backtracked from hiking gas prices, taking the ‘situation’ ahead of the 11th general election into consideration.