Petrobangla faces challenge paying LNG bills

Petrobangla, the state owned oil and gas corporation is spending huge amount of money gratuitously for using the floating storage re-gasification units (FSRUs) at Moheshkhali of Cox's Bazar.
"We are importing maximum 2.5 million tonnes of LNG per year and minimum 1.5 million tonnes from Qatar, which translates into an import of around 1,000 million cubic feet per day (mmcfd) maximum. But the government has been importing around 600 to 700 mmcfd to bear the cost of the two FSRUs at Moheshkhali of Cox's Bazar," a senior official of the Energy Division told the Daily Observer on Saturday.
Petrobangla has to pay the terminal owners around $500,000 per day for re-gasification of up to around 1,000 mmcfd of LNG.
However, the FSRUs owned by a US firm Excelerate Energy is named as Moheshkhali Liquefied Natural Gas (MLNG) and the other is owned by a local company
Summit LNG. The state owned organization is paying the amount since the FSRUs were commissioned, one on August 18, 2018, and the other on April 29, 2019. But the country never needed to re-gasify more than 600mmcf LNG per day and interestingly never change the condition.
According to the Petrobangla, it is in huge financial pressure to pay LNG bills and sought TK 11,000 crore funds from the Finance Ministry to manage the situation but it never thinks to stop the misuse of money at any stage, the official added. In January 2021, it has been apprehended that Petrobangla would need a budgetary support of Tk 7,690 crore to meet the deficit for importing LNG.
To collect funds earlier, the Energy Division asked the state-owned gas distribution companies to deposit dues from their FDRs. However, for last two years the government has been spending around $150 million per month for LNG import.
"As per the deals, Petrobangla has to pay the terminal owners around $500,000 per day for re-gasification of up to around 1,000 mmcfd of LNG, this issue lies with the government side, the company has nothing to do " official said.
He said we know how much LNG we need and how much money we need to pay the companies but we cross all the limits here.
"The Energy Division made the deals in the framework of Independent Power Producers' (IPPs) agreement. As per the condition of the deals, terminal owners will be given full capacity charge if their facilities are capable to re-gasify," according to an official of Energy Division.
Therefore, it will have to pay the same amount to Excelerate Energy and Summit Group, whether the FSRUs re-gasify the agreed quantity or less.
Country consumes up to 3,400 mmcfd gas along with the LNG.
The price of per thousand cubic feet LNG in the global market is now around $10 to $11 for long term and $32 to $35 in spot market.
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 and 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.
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 started importing liquefied natural gas (LNG) it has to spend Tk 14,000 crore on subsidy.