Announcement of gas price hike ‘this week’

A fresh hike in gas prices is likely to be announced on Thursday, according to sources at the Bangladesh Energy Regulatory Commission (BERC). The increased prices will come into effect from next month, they said. The National Board of Revenue (NBR) yesterday approved a proposal for an SRO describing the withdrawal of taxes on liquefied natural gas (LNG) and sent it to the law ministry. The ministry is likely to complete the vetting of the SRO by today. It will then be forwarded to the energy regulator, which will finalise the new gas price and declare it at a press briefing.

If there is any delay in getting the vetted SRO, the gas price hike might be announced next week. NBR chairman Mosharraf Hossain Bhuiyah and the Prime Minister's energy advisor, Dr Tawfique-E-Elahi Chowdhury, met finance minister AMA Muhith on Sunday to discuss the price adjustment of gas. The minister assured them that the SRO on tax withdrawal for LNG will be active by Thursday.

BERC member Mizanur Rahman told The Independent that since imported LNG is being injected into the national grid, the price of gas is needed to be adjusted. “For adjustment of that price and the costing of gas, the SRO of NBR is required,” he said. “Once we get the SRO, the decision will be made,” he added.

Without revealing any detail, Mizanur Rahman said the gas price for the household sector will not increase, but the price for industry, commercial establishments, CNG stations and power plants will increase. A senior official of the BERC told The Independent that the new prices will come into effect from the next month.

Sources in the NBR told The Independent that as per the SRO, the duty on certificates of deposit (CD), advance income tax (AIT) and supplementary duty (SD) on LNG will be waived. Petrobangla will only need to pay 15 per cent VAT on LNG imports. Such tax waiver would save Petrobangla a total of Tk. 5,600 crore annually. In fact, Petrobangla will need to pay Tk 2,500 crore a year as VAT on LNG.

Earlier, Perobangla had to pay 40 per cent supplementary duty, 15 per cent VAT, 3 per cent AIT tax and other taxes on importing LNG, making it very costly. Recently, the Prime Minister instructed the NBR to withdraw all taxes on LNG imports. With the finalisation of the import of costly LNG a few months back, all gas distribution companies applied to the BERC for clearance to increase gas prices by up to 70 per cent. The BERC is believed to have completed the process of announcing the new rate. A government official said the imported LNG costs Tk. 26.50 per unit, whereas Petrobangla is selling it for Tk 7.36 per unit.

Right now Petrobangla is supplying more than 275 MMCF of gas per day. By December, the supply volume would be 500 MMCF of gas per day when the mixed price (local and imported ) would be Tk. 11. Titas Gas Transmission and Distribution Company Ltd (TGTDCL), Bakhrabad Gas Distribution Company Ltd (BGDCL), Jalalabad Gas Transmission and Distribution Company Ltd (JGTDCL), and Karnaphuli Gas Distribution Company Ltd (KGDCL), in their common proposal, sought the average natural gas tariff to be raised to Tk. 12.95 per cubic metre from the existing Tk 7.39.

They wanted to raise the tariff for gas-fired power plants to Tk. 10 per cubic metre from the existing Tk. 3.16. They also wanted to raise the tariff for fertiliser factories to Tk. 12.80 per cubic metre from the existing Tk. 2.17. The price of compressed natural gas (CNG) in filling stations has been proposed to be hiked to Tk. 48 per cubic metre from the existing Tk. 40.

For the industrial sector, the tariff for natural gas, as sought by the distributors, would be Tk. 15 per cubic metre in place of the existing Tk. 7.76. For gas-fired captive power plants, the tariff sought is Tk. 16 per cubic metre from the existing Tk. 9.62. The gas price for tea gardens has been proposed to be fixed at Tk. 12.80 per cubic metres from the existing Tk. 7.42. But there will not be any increase for household customers.  On March 1, 2017, the regulatory commission raised the natural gas tariff by 22.70 per cent for all types of consumers.

Announcement of gas price hike this week

A fresh hike in gas prices is likely to be announced on Thursday, according to sources at the Bangladesh Energy Regulatory Commission (BERC). The increased prices will come into effect from next month, they said. The National Board of Revenue (NBR) yesterday approved a proposal for an SRO describing the withdrawal of taxes on liquefied natural gas (LNG) and sent it to the law ministry. The ministry is likely to complete the vetting of the SRO by today. It will then be forwarded to the energy regulator, which will finalise the new gas price and declare it at a press briefing. If there is any delay in getting the vetted SRO, the gas price hike might be announced next week. NBR chairman Mosharraf Hossain Bhuiyah and the Prime Ministers energy advisor, Dr Tawfique-E-Elahi Chowdhury, met finance minister AMA Muhith on Sunday to discuss the price adjustment of gas. The minister assured them that the SRO on tax withdrawal for LNG will be active by Thursday. BERC member Mizanur Rahman told The Independent that since imported LNG is being injected into the national grid, the price of gas is needed to be adjusted. For adjustment of that price and the costing of gas, the SRO of NBR is required, he said. Once we get the SRO, the decision will be made, he added. Without revealing any detail, Mizanur Rahman said the gas price for the household sector will not increase, but the price for industry, commercial establishments, CNG stations and power plants will increase. A senior official of the BERC told The Independent that the new prices will come into effect from the next month. Sources in the NBR told The Independent that as per the SRO, the duty on certificates of deposit (CD), advance income tax (AIT) and supplementary duty (SD) on LNG will be waived. Petrobangla will only need to pay 15 per cent VAT on LNG imports. Such tax waiver would save Petrobangla a total of Tk. 5,600 crore annually. In fact, Petrobangla will need to pay Tk 2,500 crore a year as VAT on LNG. Earlier, Perobangla had to pay 40 per cent supplementary duty, 15 per cent VAT, 3 per cent AIT tax and other taxes on importing LNG, making it very costly. Recently, the Prime Minister instructed the NBR to withdraw all taxes on LNG imports. With the finalisation of the import of costly LNG a few months back, all gas distribution companies applied to the BERC for clearance to increase gas prices by up to 70 per cent. The BERC is believed to have completed the process of announcing the new rate. A government official said the imported LNG costs Tk. 26.50 per unit, whereas Petrobangla is selling it for Tk 7.36 per unit. Right now Petrobangla is supplying more than 275 MMCF of gas per day. By December, the supply volume would be 500 MMCF of gas per day when the mixed price (local and imported ) would be Tk. 11. Titas Gas Transmission and Distribution Company Ltd (TGTDCL), Bakhrabad Gas Distribution Company Ltd (BGDCL), Jalalabad Gas Transmission and Distribution Company Ltd (JGTDCL), and Karnaphuli Gas Distribution Company Ltd (KGDCL), in their common proposal, sought the average natural gas tariff to be raised to Tk. 12.95 per cubic metre from the existing Tk 7.39. They wanted to raise the tariff for gas-fired power plants to Tk. 10 per cubic metre from the existing Tk. 3.16. They also wanted to raise the tariff for fertiliser factories to Tk. 12.80 per cubic metre from the existing Tk. 2.17. The price of compressed natural gas (CNG) in filling stations has been proposed to be hiked to Tk. 48 per cubic metre from the existing Tk. 40. For the industrial sector, the tariff for natural gas, as sought by the distributors, would be Tk. 15 per cubic metre in place of the existing Tk. 7.76. For gas-fired captive power plants, the tariff sought is Tk. 16 per cubic metre from the existing Tk. 9.62. The gas price for tea gardens has been proposed to be fixed at Tk. 12.80 per cubic metres from the existing Tk. 7.42. But there will not be any increase for household customers. On March 1, 2017, the regulatory commission raised the natural gas tariff by 22.70 per cent for all types of consumers.