After six years of the previous hike, the ruling Awami League-led government has now planned to increase prices of gas for all types of consumers, significantly at household level, with a view to reducing wastage.
State-owned Petrobangla has proposed proportionately lower hike for industrial and commercial users (around 30%) than for the households (over 122%) since it wants to give the business entities a breathing space.
Petrobangla Chairman Hossain Monsur thinks gas wastage has been increasing at an alarming level due to its low price. It is resulting in huge revenue loss for the government.
He, however, could not give any estimation of the wastage.
Monsur also claimed that the gas distribution companies were not making any profit since the prices had not been increased in the last six years.
“We will soon send a proposal to the Bangladesh Energy Regulatory Commission (BERC) to increase gas prices,” he told the Dhaka Tribune.
“Prime Minister Sheikh Hasina has recently approved a proposal of the Energy Ministry in this regard. The BERC, after scrutinising the proposal, will hold an open meeting and then a public hearing before giving a decision,” he said.
“The readjustment has not been proposed for a longer period of time,” he added.
Another reason behind the hike at household level is to reduce the gap of prices between pipeline gas and liquefied petroleum gas (LPG).
Currently, a pipeline consumer pays Tk450 per month for a double burner while an LPG cylinder costs around Tk1,400 to Tk1,500.
Regarding the proposed hike at commercial and industrial levels, he said: “Gas is being used in bulk amount for commercial purpose where a small change in the price leaves big impact on the businesses.”
Gas prices were increased last time in November 2008. After coming to power in 2009, the Awami League-led government increased only the price of CNG several times.
Monsur said the distribution companies were facing loss since the prices had not been increased in the last six years. “Salary and wages of Petrobangla officials and employees increased in the last six years but our revenue from gas sale did not increase,” he said.
“Moreover, Petrobangla has to undertake several projects from its own finance as it received approval for less projects than demanded under the Annual Development Programme (ADP),” he said.
A substantial portion of the sale goes to the Gas Development Fund (GDF). At present, the fund has about Tk4,300 crore under which 13 projects worth Tk3,700 crore are under way.
Meanwhile, Petrobangla has to pay the international oil companies more than before for each unit gas as they have increased production by 2-3% in the past two years.
“In addition, the costs go up due to appreciation of dollar,” he said. Petrobangla pays the IOCs in dollar.
The state-owned body also has to pay the corporate taxes of the IOCs at a rate of 37.5%, he said.
According to the Petrobangla proposal, domestic users will have to pay Tk1,000 instead of Tk450 for each double burner – a hike of 122.22%. For single burner, the new rate has been proposed Tk850 up from Tk400 a month. It is 112.5% higher than the previous price.
Consumers using meter-based burners will have to pay Tk235 instead of Tk146.25 per month – a 60.68% increase from the previous price.
The second highest hike (102.94%) has been proposed for captive powers (privately-owned smaller power plants) – Tk240 from Tk118 for 1,000 cubic feet of gas.
Tariff for power plants has been proposed Tk84 for every 1,000 cubic feet of gas (5.24% rise). The price was earlier Tk79.82.
The fertiliser companies will have to pay Tk80 from Tk72.92 (9.71%) while industrial users Tk220 from Tk165.91 (32.60%).
According to the proposal, prices of gas will be Tk350 from Tk268.09 (30.55%) for commercial users, Tk200 from Tk165.91 (20.55%) for tea gardens, Tk905.92 from Tk651.29 (39.10%) for CNG refuelling stations and Tk1,132.67 from Tk849.50 (33%) for CNG at consumer level.
Petrobangla would urge the BERC to make the new rates effective from November 1.
“I do not think the price should be increased. It will only benefit the officials of the distribution companies who are already facing allegations of corruption,” Prof Samsul Alam, adviser of the Consumers Association of Bangladesh, told the Dhaka Tribune yesterday.
“The price hike will increase the amount of bribes they receive from every illegal connection,” he observed.