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No gas price hike for now: BERC

Bangladesh Energy Regulatory Commission (BERC) on Tuesday declared of not increasing gas prices, announced to subsidize around Tk 3,100 crore in the ongoing fiscal to maintain the status quo.

The watchdog body announced its decision at a press conference at the commission office in Dhaka.

In a packed hearing room of the BERC office in Karwanbazar, the declaration came amidst surprise; while many terming it a populist move by the government ahead of the election at yearend.

BERC Chairman Monowar Islam was present at the press conference also attended by BERC members Rahman Murshed, Md Mahmudul Haq Bhuiyan, Md Abdul Aziz Khan and Md Mizanur Rahman.

When asked whether upcoming election has played any part, Monowar Islam said, “We are not Election Commission and we did not think of election while adjusting the gas price.”

“The decision was taken basing on the proposals that we receive from the gas transmission and distribution companies and our own methodologies,” he added.

The BERC Chairman said the gas price hike proposals from the gas distribution and transmission companies were on the regulator’s chalkboard as liquefied natural gas (LNG) was supposed to be blend with the piped gas—because of which the average price of gas should have been hiked.

“It was assumed by the companies that around 1,000 mmcfd LNG was going to be added. But in reality, after much dilly-dallying, less than 300 mmcfd LNG has so far been added. So we did not feel the necessity of hiking the price,” he said.

Monowar said, the National Board of Revenue (NBR) decision of withdrawing all import supplementary and customs duties and advance trade VAT (ATV) on LNG also helped them to take the decision of keeping the gas price unchanged.

The NBR move implies that 5 percent customs duty and 5 percent advance trade VAT alongside a 93.24 percent SD on LNG is no longer applicable.

“So such move by the exchequer has offset the price adjustment needed to minimize the subsidy,” said Monowar.

“In simpler words, the average unit price of gas is now Tk 7.19 and we needed to increase Tk 1.46 if those taxes and duties were not waved on LNG by the NBR,” Monowar said adding that a total of Tk 3,100 crore will have to be given as subsidy in the ongoing fiscal now.

According to the latest circular issued by the BERC, the industry, captive power, tea-garden, commercial and household subscribers of gas now have to give two months and four months of security deposit instead of three and six.

The captive, industry and tea-garden now has to give one-third security deposit in cash instead of 50 percent and 50 percent bank guarantee instead of two-third. In case of pre-paid meter, no security deposit will be needed. 

Earlier, all the seven state-owned downstream entities in gas sector - six distribution companies, one transmission company - had appealed to the BERC seeking an average 75 per cent hike on the existing gas prices for different consumer groups except the household and commercial ones.

The upward price revision was sought for industrial consumers, power plants, fertilizer factories, captive power plants, and CNG refueling stations.

The distribution companies are Titas Gas Transmission and Distribution Company Limited, Bakhrabad Gas Distribution Company Limited, Jalalabad Gas Transmission and Distribution System Limited, Pashchimanchal Gas Company Limited, Karnaphuli Gas Distribution Company Limited and Sundarbans Gas Company Limited.

While participating in the hearing, the gas entities argued that as per the government decision they had to submit their respective price hike proposals because of the high import cost of LNG as it will push up their cost substantially.

The Petrobangla started supplying the imported LNG to national gas network from August 18 through re-gasification by private sector-operated floating storage and re-gasification unit.

Officials said currently 300 mmcfd gas is being supplied from LNG and it will go up to 500 mmcfd in a month or two and then 1000 mmcfd gas will be flowed from next year as per a government plan.

 

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