Petrobangla asks firms to submit papers to BERC for fixing tariff

Petrobangla, the state-owned Oil and Gas Corporation has asked all of its subsidiaries to submit tariff scenarios and company balance sheets immediately before the energy regulator BERC to review the scenario and save the companies from financial crunch.
On March 11 in 2021 Petrobangla and its six distribution companies -- Titas, Bakhrabad, Jalalabad, Pashchimanchal, Karnaphuli and Sundarban -- proposed hiking the price of gas to Tk 12.19 per cubic metre. However, BERC rejected the proposal saying that it will 'hit the economy,
make businesses uncompetitive and cause fuel inflation.'
"If we do not adjust the price, we have to provide a subsidy for the additional cost. Even after the adjustment, we will have to subsidise it," State Minister for Power, Energy and Mineral resources Nasrul Hamid said. He was talking about the 'unprecedented' LNG price in the global market.
Gas production cost stands at Tk 14 per cubic metre, after the imported LNG is mixed with the locally produced gas. At the moment, the government sells it at Tk 7.17.
Petrobangla said the subsidy cost would rise to Tk 10,000 crore in the last three months as LNG price has increased globally.
In March, the government sent a proposal to Bangladesh Energy Regulatory Commission (BERC) to increase gas prices, and it was now up to the commission to take a decision, he added.
In July 2019, the government raised the price of domestic natural gas by a weighted average of 32.8 per cent, which was the largest rise in the country's history to mitigate losses incurred by the increasing cost of LNG imports.
However, BERC hiked consumer natural gas tariffs by 22.70 per cent in March 2017 and by 26.29 per cent in September 2015.
According to the Energy Division official Petrobangla is being paying the LNG import bill from gas price hike which is 75 per cent of the total LNG import bill, however the remaining cost are being met by BERC's Energy Security Fund (Tk 24.20 billion) and government subsidies (Tk 76.90 billion).
"This time we failed to pay the LNG bill from these two pockets as the LNG price jumped and we cannot do anything with this amount," the official said.
Last time the government increased fertilizer tariffs by 64.20 per cent, CNG prices were raised the least, 7.5 per cent, gas-fired power plants tariff was increased 40.82 per cent. It was 43.97 per cent for the captive power plants and 37.88 per cent for the industrial sector.
However, the subsidy in the gas sector was Tk 5,000 to Tk 6,000 crore a year just four years back. But when the government has started importing liquefied natural gas (LNG) it has to spend Tk 14,000 crore on subsidy.