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Fresh gas price hike soon as LNG import duty, SD are dropped

  • Published at 12:47 am October 6th, 2018
gas stove.jpg
File photo of a gas stove Collected

The move implies that 5% customs duty and 5% advance trade VAT alongside a 93.24% SD on LNG will no longer be applicable. However, the existing 28.986% value added tax (VAT) will remain unchanged.

The government has recently withdrawn all import, supplementary and customs duties and advance trade VAT (ATV) imposed on the expensive liquefied natural gas (LNG), paving the way to announce a fresh gas price hike.

The move implies that 5% customs duty and 5% advance trade VAT alongside a 93.24% SD on LNG will no longer be applicable. However, the existing 28.986% value added tax (VAT) will remain unchanged.

The exemption of the duties and the ATV will prompt the Bangladesh Energy Regulatory Commission (BERC) to announce a fresh hike in gas prices - a move aimed at adjusting the cost of the expensive imported LNG.

Sources at the energy regulatory body said the BERC may announce the gas prices raised anew in the coming week.

The Internal Resources Department (IRD) under the Finance Ministry and the National Board of Revenue (NBR) issued three Statutory Regulatory Orders (SROs), all signed by Senior Secretary Md Mosharraf Hossain Bhuiyan, on Thursday.

The IRD, on September 30, issued an SRO containing the signature of Sultan Md Iqbal, member (grade-1) of the NBR, to withdraw the import duties.

All the four circulars say the government’s move will be deemed effective from September 18.

Sources said BERC and Bangladesh Oil, Gas and Mineral Corporation, also known as Petrobangla, had been demanding the tax cuts since last year. On June 7 last year BERC sent a letter to NBR in this regard.

Petrobangla Chairman Abul Mansur Md Faizullah recently said they wrote to the Energy and Mineral Resources Division seeking help on immediate issuance of the SROs since the BERC was in need of the copies of the letters before it announced fresh price hike of natural gas. 

Bangladesh currently faces a shortage of 1 billion cubic feet of gas a day (bcfd).  The demand is around 3.7 bcfd.

Considering the overall situation, the government started importing LNG from Qatar and has already signed an import deal with Oman. Bangladesh has also shortlisted over two dozen suppliers to purchase LNG on a spot basis.

Earlier, the BERC held a mass hearing on the proposed gas price hike between June 11 and June 21 after the seven state-run gas companies sought up to a 372% hike for six sectors. The gas companies, however, exempted the residential and commercial users from the proposed hike.

The maiden consignment of LNG reached Moheshkhali, Cox's Bazar from Qatar’s state-Owned RasGas on April 24. But technical glitches and inclement weather caused repeated delays in LNG commissioning.

After missing several deadlines to start injecting LNG into the national grid, the country received the supply of the re-gasified super-chilled fuel item, for the first time in its history, on August 18.

Petrobangla also has a preliminary agreement with a Switzerland-based private firm AOT Energy to annually import around 1.25 million tons of lean LNG for 15 years.  The state-owned company is in talks with Indonesia to import LNG.