GTCL asks BERC to hike gas price

Published : Tuesday, 12 June, 2018 at 12:00 AM

Shahnaj Begum

The Gas Transmission Company Ltd (GTCL) on Monday asked the Bangladesh Energy Regulatory Commission (BERC) to hike gas price by Tk 0.4476 per unit to offset its loss. However, rejecting the plea of the GTCL, the BERC technical committee said it is rational to allow the company to increase gas price by TK 0.3689 per unit at a public hearing organized by the BERC. The BERC kicked off a 5-day public hearing on gas price hike proposals of the gas transportation and distribution companies on Monday at Karwan Bazar TCB Bhaban to minimize the government subsidy in energy sector.

The commission last raised the gas prices by about 22 percent on an average in two phases, from March 1 and June 1 in 2017. Although the price hike proposal is basically centred on import and transportation cost of Liquefied Natural Gas (LNG), the GTCL did not mention the issue directly. Rather, it said it needs huge money to implement its 12 pipeline project. "After 1,000 mmcfd (equivalent) of gas is injected into the national grid we could be able to supply around 3690 mmcfd of gas into the national grid incurring a loss of TK 0.4476 per unit," GTCL official told the public hearing.

Gas could become costlier in 2018 by as much as 60 per cent compared to the present prices, when imported liquefied natural gas (LNG) will be injected into the national gas gridline, an industry insider said. Earlier, in 2010 the government decided to import LNG. In 2017 imported about 1,000 mmcfd gas (equivalent) to produce 5,000 megawatts of electricity. As imported LNG is almost here, the issue of its impact on prices has come to the front.

The import of LNG is part of the government's efforts to eliminate gas shortages and power outages and unlock the potential of the economy.
Petrobangla estimates that the contribution of 1,000 mmcfd of gas to the economy will be equivalent to Tk 276,000cr (about $34 billion). The gas will cost $3 billion and might ease the decades-long gas crisis. For last one year, Petrobangla and the Energy Division has been working on the issue.Iit said the gas prices would go up by at least 100 per cent with the injection of the imported LNG into the national grid, and the government will have to give subsidy of billions of dollars to keep it under the reach of the mass.

"The Energy Division has presented a paper to the commission where it depicted a clear scenario of fuel import and cost of it. It also presented its future plan to the commission to ensure energy supply to the national grid," the official said. Under this circumstances, the Energy Division sought support from BERC in rationalizing the gas tariff to the high cost of LNG as the government needs around Tk 14,000-Tk 15,000cr for importing 1000 mmcfd of LNG from the current fiscal year.

"Fixing the energy prices in Bangladesh will get tougher in the future. Many factors including international market, subsidy, the usage pattern of energy resources, loan policy, overall improvement in efficiency etc likely have a direct impact on adjusting the price. So, predicting the price of the energy might appear as a challenging task for everyone. However, the price predictability is extremely important for Industries, especially for electricity," BERC official said.

To supply the gas, GTCL installed a 91km undersea pipeline linked with the grid in Anwara of Chittagong. However, to ensure the imported gas to the national grid another 40km pipeline from Anwara to Sitakunda is ready for use. M Tamim, a professor of petroleum Engineering Department at Bangladesh University of Engineering and Technology, said there was no option for the government but to import LNG as the economy is gas-based. He said the energy cost for energy-intensive industries would go up because of the blending of the $10 per thousand cubic metre LNG with the $3 per thousand cubic metre of local gas.

So, these industries should explore ways to increase efficiency in order to offset the energy price hike while the government could go for targeted subsidies so that the would-be-affected sectors could remain competitive, said Tamim. Transmission cost will boost up the cost of gas distribution companies. Therefore, the BERC also set to conduct another four hearings in the next four consecutive days. Against this backdrop hearing on gas price hike proposal at retail level started from Monday.

Gas companies argued that import of liquified natural gas (LNG) will push up their cost substantially. The official sources said the household and commercial (hotel, restaurants etc.) consumers were kept outside the gas price hike purview considering the upcoming general election billed for December this year. However, all the state-owned gas distribution and transmission companies including Titas Gas have sought to hike gas prices on an average 75 percent for different consumer groups.

Such price increase proposals, however, are not meant for household and commercial consumers. If comes in force, hike will mainly affect large-scale consumers like power plants, fertiliser factories, captive power plants, industries, and CNG refueling stations. According to the document, the largest gas distribution company Titas has proposed to raise 206 percent price hike for power plants as it proposed Tk 10 per cubic meter (CM) for power plants in place of exiting price of Tk 3.16.

Gas price for fertiliser factories were proposed to hike the highest 372 percent where it sought the price to be Tk 12.80 per CM against the existing rate of Tk 2.71 per CM. The captive power plants' gas price was proposed to be Tk 16 per CM against Tk 9.62 while Industries gas price was proposed at Tk 15 per CM against the existing Tk 7.76 per CM and CNG gas price was proposed to be Tk 40 per CM against existing rate of Tk 32.

The government last increased the gas price on February 22, last year, in two phases. The first phase came into effect in March 2017 when the charge for a single burner stove was increased to Tk 750 from Tk 600 and for double burner stove to Tk 800 from Tk 650. The second phase was supposed to come into effect from June the same year and the monthly charge for a single burner stove was fixed at Tk 900 and double burner stove at Tk 950. The second phase hike could not be implemented because of a High Court order.