Public hearing on price spikePetrobangla pushes for margins to cover operating costs

FT ONLINE

The state-run Petrobangla has sought margins from the gas price to help supplement its operating costs and carry out regular work.

The Petrobangla and the Rupantarita Prakritik Gas Company Ltd (RPGCL) made the push on Monday - the last day of public hearing over tariff hike.

The Petrobangla sought Tk 0.23 per cubic metre (cm) from blended gas, meaning the mixture of locally-produced gas and imported re-gasified LNG (liquefied natural gas).

Also, the RPGCL sought Tk 0.40 per cm from the imported LNG price.

The state entities made their case with the Bangladesh Energy Regulatory Commission (BERC), saying their costs would increase significantly due to the import of LNG, its re-gasification and supply to consumers.

The Petrobangla used to meet its operating costs and other relevant expenses after collecting service charges from its subsidiary companies.

And the RPGCL was self-reliant.

The state-run gas companies would provide different amounts as service charges to Petrobangla depending on their profits.

"But this practice of taking service charge can't go for a long," said a senior Petrobangla official.

The RPGCL sought margin from LNG price to carry out its new job of importing LNG and its re-gasification, said a senior company official.

On the concluding day of public hearing, the Petrobangla argued that the blended gas price would be Tk 9.69 per cm.

It would import around 500 million cubic feet per day (mmcfd) equivalent of LNG at US$ 8.5 per cm from the international market.

The blended gas price would be Tk 10.91 per cm after importing around 500 million cubic feet per day (mmcfd) equivalent of LNG at US$ 10.76 per cm from the international market.

When contacted, BERC chairman Monwar Islam said that it would take time to decide on the gas tariff hike after reviewing proposals and arguments placed in public hearings.

The energy regulator started public hearing from June 11 over the gas tariff hike proposals from the state-run gas companies for near doubling the rate for consumers except households.

The state-run gas companies submitted the tariff hike proposals to the BERC within one year of the previous hikes to cope with the increased energy costs with the import of expensive LNG.

Bangladesh received its first LNG cargo on April 24 as the US-based Excelerate Energy Bangladesh Ltd brought in its floating, storage and re-gasification unit (FSRU) carrying 136,009 cubic metre of lean LNG from Qatar's RasGas.

Excelerate has not completed synchronising the FSRU with the necessary pipeline yet, it has been alleged.

The delays in constructing necessary pipeline along with tie-up and 'synchronisation' complexities have held back the supply of re-gasified LNG to consumers.

The BERC had earlier raised the natural gas tariff by 22.70 per cent for all types of consumers in phases with effect from March 1, 2017 and June 1, 2017 respectively.

Fresh hikes in natural gas tariff might also come in phases with the increase of the import volume of LNG in the country, said gas-sector people.

The gas distribution companies in their unified proposals sought the average natural gas tariff be raised to Tk 12.95 per cubic metre (cm) from the existing Tk 7.39 per cm.

They wanted to raise tariff for gas-fired power plants to Tk 10 per cm from the existing Tk 3.16, for fertiliser factories to Tk 12.80 per cm from the existing Tk 2.17.

The price of compressed natural gas (CNG) in the filling stations has been proposed to be hiked to Tk 48 per cm from the existing Tk 40.

For the industrial sector, natural gas tariff as sought by the distributors is Tk 15 per cm in place of the existing Tk 7.76.

For gas-fired captive power plants, the hike has been proposed to be Tk 16 per cm from the existing Tk 9.62.

Gas tariff for tea gardens has been proposed to Tk 12.80 per cm from the existing Tk 7.42.

But different rights groups protested the tariff hike move.

Energy advisor of the Consumers Association of Bangladesh (CAB) Professor M Shamsul Alam underlined the need for checking gas theft.

Any increase in tariff would be burdensome for the common people, he argued.