BERC public hearing on gas price hike before budget

Bangladesh Energy Regulatory Commission (BERC) has accepted the proposals of price hike of gas and power distribution agencies and decided to go for public hearing for fixing a new tariff chart of these two commodities before the budget session.
"We are going to announce the public hearing dates on the proposals submitted by the gas distributing utility agencies from March, 2022. However, we plan to conduct the hearing separately, first the gas than
electricity and we hear each proposals," a senior officials of the BERC told the Daily Observer on Tuesday.
He said they had taken up the proposals, although earlier they said that they asked the utilities to make the proposal a realistic one, now everything is Okayed.
In January 15 several distribution companies proposed the BERC to raise gas price as much as 117 per cent following the government's directive to cope with subsidies.
Separately, their principal gas supplier Petrobangla also placed its proposal to raise the price of the natural gas at bulk level.
Titas Gas Transmission and Distribution Company Ltd, Pashchimanchal Gas Company Limited, Bakhrabad Gas Transmission and Distribution System Ltd submitted separate proposals to the BERC last week seeking an increase in gas price. Although the proposals were separate, the companies proposed to increase the gas price at a uniform rate.
According to their proposal, they are to raise household gas price from the existing Tk 975 to Tk 2,100 for double burners and from the existing Tk 925 to Tk 2,000 for a single burner, while the price of each cubic meter of gas from the existing Tk 12.60 to Tk 27.37 for the burners has been asked for pre-paid meters.
Besides, the tariff for CNG used in transports proposed to raise from Tk 35 to Tk 76.04, and from Tk 23 to Tk 49.97 per cubic meter for hotels and restaurants.
The price of gas used for generation of electricity and production of fertilisers has been proposed to raise from the existing Tk 4.45 to Tk 9.66 for per cubic meter; from the existing Tk 10.70 to Tk 23.24 for per cubic meter of gas used in industrial sector; from the existing Tk 13.85 to Tk 30 for per cubic meter of gas used in captive power generation in industries and factories; from the existing Tk 35 to Tk 76.48 for each cubic meter of gas used in transports.
The gas prices for small and cottage industries have been proposed from Tk 17.04 to Tk 37.02, and from Tk 10.7 to Tk 23.24 for tea gardens, officials said.
"Obviously, it would increase the cost of electricity generation, however, we had already received power tariff proposal...yes, we will also conduct hearing on power tariff issues," official said.
People have become very worried at the fresh proposals of gas price hike following widespread protests over transport fare increase issue in the wake of diesel price hike by Tk 15 per liter in November last year.
They think that gas price hike will lead to power, fertiliser and CNG-run transport fare hike which will subsequently increase their expenses, making lives very difficult.
The Energy Division argued that the price needs to increase due to increases in LNG price in the international market, which is baseless.
Currently, the Petrobangla supplies 2,700-3,000, million cubic feet (mmcfd) gas per day of which 2,300 mmcfd is produced locally while 600 mmcfd is imported as liquefied natural gas LNG.
"Petrobangla currently imports only 5 per cent of its daily consumption from highly volatile international spot market where it has to buy gas at higher price. It imports its 20 per cent gas from two international companies under long-term contracts where price is static," Petrobangla data book said.
If the local production is raised by 5 per cent, then the country will not need to import the 5 per cent gas from volatile market at higher price and finally it would not have to raise the gas price at retail level.
The remaining 725 million cubic feet of gas is supplying from imported LNG. Out of these, the price was fixed for about 600 million cubic feet of gas for 10 years under a long-term contract. Only 100 to 125 million cubic feet of gas is being bought from the LNG spot market. For that, why the price of gas has to be doubled?
According to sources, the price of LNG per thousand cubic feet was only $10 before August last year in the international spot market but now it has climbed to $45.
The government had to give subsidies amounting to Tk 2,125 crore when it went to buy three ships of LNG from the international spot market on an emergency basis in October last.
The last gas tariff was announced in July 2019, when the BERC increased the bulk gas price by 32.8 per cent to Tk 9.80 per cubic feet from Tk 7.38.
On the other way, if the proposal is accepted, consumers will have to pay Tk19-20 per cubic metre of gas, while the current rate is Tk9.80, according to sources at the Bangladesh Energy Regulatory Commission (BERC).
Adviser to Consumers Association of Bangladesh Prof Shamsul Alam said the government is asking for extra price for 1,000 LNG import. But the government is fully aware that it will not be possible to import this gas by April this year.
Bangladesh Textile Mills Association, BGMEA, BKMEA in separate media briefing said if the industry faces closure for increased gas price, it will have multiple impacts on the economy.