The Bangladesh Energy Regulatory Commission (BERC) is likely to increase gas prices at all consumer levels and is considering how to use excess revenues from household consumers to subsidise Liquefied Petroleum Gas (LPG) cylinders.
In a bid to decrease cost discrimination in primary energy use, BERC hopes to divert surplus revenues from household consumers to LPG cylinder subsidies in order to aid users not served by piped gas.
Stakeholders agreed conditionally to hiked prices if they enabled subsidies and, amid a lively debate, urged the commission to design the subsidies well.
According to the state-owned Infrastructure Development Company Limited (IDCL), just 3% of the population, primarily based in urban areas, uses natural gas delivered by pipeline.
Shamsul Alam, energy adviser to the Consumer Association of Bangladesh (CAB), during hearings on the proposals of the two gas distribution companies, said: “I request the commission not to increase gas prices. But if prices are hiked, they can help subsidise LPG cylinder use in rural areas and areas where there are no pipelines.”
“No government has ever taken any step to curb discrimination in the use of primary fuel. Relatively high-income families enjoy much cheaper natural gas from pipelines. Discrimination exists not only between urban and rural users but also among different regions in the country,” he said.
He said there was a need to check irregularities and graft in the gas sector.
BERC Chairman AR Khan and members Salim Mahmud, Delwar Hossain and Md Maksudul Haque attended the hearing at the capital’s BERC office yesterday.
BERC began hearings on proposed increases to natural gas tariffs and wheeling charges on February 2.
A proposal sent by the Ministry of Power, Energy and Mineral Resources recommended raising the prices from between 5.24% and 122.22%.
According to gas distribution companies’ proposals, domestic users will have to pay Tk1,000 every month instead of Tk450 for each double burner, a 122.22% price hike.
On the other hand, Tk850 is the proposed tariff for single burners, which is currently Tk400. The proposed price is 112.5% higher than the existing figure.
BERC Chairman AR Khan said a decision on gas prices would likely be delayed because the commission needs more time to weigh the options.
He advised distribution companies to install pre-paid gas meters to help bring all consumers under coverage at an affordable cost within the earliest possible time.
He said pre-paid gas meters with electronic volume correctors (EVC) should be provided to each new and old commercial and industry gas consumer to reduce hassles.
Retired Buet professor, Md Nurul Islam, said: “The people of many districts do not get to use piped gas despite the abundance of natural gas passing via pipes right under their noses. They must rely on cylinder gas, firewood or kerosene which are a lot more expensive.”
“While a household user in a nearby city has to pay a maximum of Tk450 a month for 24-hour-gas supply via pipeline, residents of many other areas spend five to eight times more to have clean fuel in their kitchens in the form of cylinder gas,” he said.
A 12.5kg cylinder of LPG costs between Tk1,500 and Tk1,800, although the government-fixed price of a cylinder of LPG is Tk700 – less than half the amount.
“A medium-sized family needs two cylinders a month, amounting to an average of Tk3,000 in monthly expenditures for clean fuel,” Nurul said.
On the last day of the hearing, Md Mostafizur Rahman, managing director of the Jalalabad Gas Transmission and Distribution System Limited and Mohammad Khalequzzaman, managing director of the Sundarbans Gas Company Limited, presented separate proposals to hike gas prices by 40% on an average.
The technical evaluation committee of BERC recommended raising gas tarifsf of Jalalabad Gas Limited. It recommended increasing the average tariff of Jalalabad by 4.98%.
The technical evaluation committee also recommended that an increase of Sundarbans Gas Company gas tariffs should be considered, but did not say by how much it would go up.