Distribution companies have proposed to more than double the price of gas for all classes of customers. It has been proposed to increase the price of gas used by residential customers from Tk 9.38 to Tk 20.35 per cubic meter and for gas used in industry from Tk 10.70 to Tk 23.24 per cubic meter.
At the same time, it has been proposed to increase the captive (industrial gas used for own power generation) from Tk 13.85 to Tk 30. So far, three of the six gas distribution companies, Titas, Bakhrabad, and Western Gas, have submitted separate proposals to the Bangladesh Energy Regulatory Commission (BERC) last week.
The other three companies are in the process of submitting proposals. If this proposal is taken into account, the price of one stove will increase from Tk 925 to Tk 2,000 and for two stoves from Tk 975 to Tk 2,100. A responsible source of Petrobangla has given this information.
The second wave of coronavirus has started in this direction. In this situation, it is feared that the income of the people will decrease again. Corona has been in a recession for the past two years. In this situation, if the price of gas is increased, the price of all kinds of products will increase. At the same time, analysts believe that the suffering of residential customers will increase.
According to Petrobangla sources, LNG is being imported at high prices to alleviate the gas crisis. This has increased the subsidy pressure of distribution companies. Last month, the Co-ordination Council on Monetary and Currency Exchange Rate suggested raising electricity and fuel prices to cope with the subsidy pressure.
Then on January 3, the Energy Department instructed Petrobangla to send a proposal to BERC to increase the price of gas. Later, a draft of LNG and domestic gas imported from Petrobangla was sent to the distribution companies on January 5 with charges of price, VAT-tax, various funds.
Distribution companies then send their proposals to the commission, suggesting a similar price increase, citing their revenue and expenditure accounts. At the same time, companies have submitted proposals to increase their operating expenses (margins). The last time Bakhrabad Gas Distribution Company sent their proposal to BERC was on January 17.
Analyzing the proposals, it was found that the three distribution companies had submitted almost identical proposals to increase the price of gas. It has been proposed to increase the price of gas used in fertilizers and power plants by 125 percent per cubic meter from Tk 4.45 to Tk 9.66. It has been proposed to increase the captive used in the industry by 116 percent.
Hotel-restaurant prices have been proposed to increase by 117 percent. In this sector, it has been proposed to increase it from Tk 23 to Tk 50. In small and cottage industries, the distribution companies have proposed an increase of 117 percent from Tk 17.4 to Tk 37.2, in CNG by 114 percent from Tk 35 to 75-76 and in residential meters by 115 percent from Tk 12.62 to Tk 27.37. At the same time, Titas has applied to increase its operating margin from 25 paise to 38 paisa, Jalalabad from 55.18 paisa, and Bakhrabad from 26 paise to 76.84 paisa.
Among the proposals, Bakhrabad submitted a price hike proposal to BERC at the end of January 17. In Bakhrabad’s proposal, the existing price per cubic meter has been increased from Tk 12.60 to Tk 27.37 for customers using prepaid meters in residential areas, in hotel-restaurant from Tk 23 to Tk 49.97, in small and cottage industries from Tk 17.04 to Tk 37.02.
It has been proposed to increase the captive power from Tk 13.85 to Tk 30.09 and in the tea industry from Tk 10.70 to Tk 23.24. On the other hand, the existing rates in power and fertilizer factories have been increased from Tk 4.45 to Tk 9.66. It has been proposed to increase the average price from Tk 9.36 to Tk 20.35.
Highlighting the rationale behind the proposed price hike, the distribution companies said that the increase in LNG import cost would cost Tk 65,225 crore in the current financial year, including purchase and supply of domestic and foreign gas, operating expenses, VAT, and various charges. Of this, Tk 44,225 crore will be spent on importing 878 crore cubic feet of LNG annually.
In other words, the cost of LNG per cubic meter is Tk 50.38, of which purchase price is Tk 36.69, VAT at import level is Tk 5.50, advance income tax is 74 paisa, financing expenditure is Tk 1.44, bank charge and commission is 59 paisa, regasification cost is Tk 1.86, operational expenditure 5 paisa and Source Tax at Consumer Level 3 Taka 52 Paisa (7%).
Foreign gas companies operating in the country (IOC) will have to pay Tk 2.91 per cubic meter to buy gas. The operating cost of Bangladesh Gasfield Company (BGFCL), Sylhet Gasfield Company (SGFL), and Bapex has been fixed at 87.98 paisa, 33.83 paisa, and 4 takas 55 paisa per cubic meter respectively. Besides, the operating margin transfer company (GTCL) has been charged 86.48 paisa per cubic meter and the distribution company 27.49 paisa per cubic meter.
Petrobangla’s operating cost has been fixed at six paisa per cubic meter, gas development fund at 46.14 paisa, and energy development fund at 88.70 paisa. The government’s share is 15 percent VAT. For this reason, it is necessary to increase the price of gas at the consumer level from February 1.
According to the concerned, the distribution companies have not proposed such an increase in the price of gas in the past. Consumers and industrialists from all walks of life are trying to survive in the face of the Coronavirus outbreak. In particular, the industrialists are exporting products by reducing the profit margin.
In such a situation, if the price of gas is increased, the price of electricity will also increase. On the one hand, the cost of gas-dependent industries will increase, at the same time, if the price of electricity increases, the cost of production of products will also increase. This will further increase the price of goods. It is feared that as the general public suffers, so will the entrepreneurs.