The government has relaxed its policy of providing only loans to autonomous companies – especially power and gas ones – and decided to provide subsidies to meet the price gap with international market.
The Finance Division disbursed a fund of Tk1,000 crore as subsidy for Bangladesh Oil, Gas and Mineral Corporation, also known as Petrobangla, on Wednesday to cover the expenses of procuring gas from international oil companies (IOCs) as the prices at the international market are higher than that in the local market, an official said.
“The Finance Division has given subsidy to Petrobangla after more than a decade,” the official added, requesting anonymity.
Earlier, the top finance authority of the government disbursed loans to government agencies and autonomous bodies with a 3% interest and a payment period of 20 years.
Sources said Petrobangla buys gas from IOCs at Tk292 per 1,000 cubic metres, including the taxes, but it sells the same volume of gas at Tk176, including taxes, in the local market.
Hence, Petrobangla pays a subsidy of Tk126 for every 1,000 cubic metres of gas.
Earlier in 2016, the government started waiving the tax imposed on gas at the time of import or purchase, including the 15% VAT.
The government also allotted a Tk3,000 crore fund for gas price subsidy in the 2017-18 fiscal year, which was announced by Finance Minister AMA Muhith during his budget speech.
Muhith also said the price of natural gas was likely to be raised to import LNG (liquefied natural gas), which would be used to meet the country’s demand for gas. However, subsidies will be provided to keep the gas price within a tolerable range.
According sources in the Energy and Mineral Resources Division, the gas price in the local market is likely to increase from $3.50 (around Tk289) to $7-8 (around Tk660) per unit from April next year when LNG will be injected into the national grid.
As per a government presentation on LNG price, the rate will be increased to Tk27.97 per unit from Tk6.