Govt to review gas tariff of KAFCO  

The Ministry of Energy and Mineral Resources is set to review the gas tariff of Karnaphuli Fertiliser Company Ltd (KAFCO) as re-gasified LNG is added to the national grid.
Presently, per thousand cubic feet of gas is sold by $4.55cents (Tk 10 per cubic metre as against Tk 7.76 per cubic metre for Industrial Sector) to KAFCO.
"We reviewed the tariff last time in September 2015 after 20 years, however, we will do that as we are importing high cost LNG from abroad and supplying it to the national grid after blending it with our local gas," a senior official of the Energy Division told the Daily Observer on Thursday.
The Energy and Mineral Resources Division (EMRD) endorsed the Karnaphuli Gas Distribution Company Ltd (KGDCL) idea to increase the tariff as the government has taken up a plan to meet natural gas demand for country's two major fertiliser factories - the Karnaphuli Fertiliser Company Ltd (KAFCO) and the Chittagong Urea Fertiliser Ltd (CUFL) - through import of Liquefied Natural Gas (LNG), a top official said.
Due to gas shortages, the     government at different times has shut down six fertiliser factories including KAFCO and CUFL in a bid to divert gas supply into power plants to ensure uninterrupted electricity supply.
"We have a plan to procure 150mmcfd of gas using platform of CUFL and KAFCO each on top priority basis," a top official of CGDCL who attended the meeting said.
Bangladesh, Japan, Denmark, Netherland, investment fund of developing countries (IFU) and sub-continental ammonia Investment Company are the joint owners of KAFCO. At present, Bangladesh Ministry of Industry has 43 per cent ownership, Japan has 30 per cent, Denmark 20 per cent and others the rest. This factory was established in 1995 beside the river Karnaphuli in Chattogram.
Bangladesh buys KAFCO fertiliser at the international price. It manufactured Urea and Ammonia. Every year KAFCO produces almost 7 lakh MT of Urea fertiliser and 1.5 lakh MT of ammonia gas.
During the irrigation season power plants need extra gas for electricity generation. For this reason fertiliser factories remain closed as gas supply to these plants remain cut off from April-May.  
The country's largest joint venture company has recently urged the Chittagong gas distribution authority, Karnaphuli Gas Distribution Company Ltd (KGDCL), for an uninterrupted supply of 50 mmcfd gas per day and even offered a higher price for the natural gas as compared to that in the industrial sector.
"We are offering a gas price of Tk. 12 per cubic meter subject to uninterrupted gas supply of minimum 50 MMSCF per day for a period until the re-gasified LNG is added to the national grid," said Kafco's Chief Financial Officer Md Habibullah Monju in a letter sent to the authorities of KGDCL.
The official said gas is a raw material for both fertiliser and steel. Its price affects both steel and fertiliser. That is why we want to tag gas price with the international commodity price index.
The KAFCO plant is capable to produce 0.7 million tonnes of urea fertilizer annually if adequate gas supply is made available.
However, the annual domestic urea demand is 2.5 million tonnes. The urea demand is now managed through production from state-owned plants 0.8-0.9 million tonnes (annual capacity 1.8 million tonnes) and 1.6-1.8 million tonnes import. The import includes 0.4 million tonnes from KAFCO and remaining 1.2million tonnes from abroad.