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Why have 4 major gas companies proposed same price hike rates?

  • Published at 11:58 pm March 13th, 2019
Gas
In the face of vehement protest by consumer rights groups, the country’s major gas companies have all proposed to increase the gas tariffs in different sectors at massive rates Mahmud Hossain Opu/Dhaka Tribune

Companies are yet to come up with any explanation, while rights activists find it irrational and against public interests

In the face of vehement protest by consumer rights groups, the country’s major gas companies have all proposed to increase the gas tariffs in different sectors – at massive rates. 

Interestingly, four of these companies have proposed identical rates, despite being completely different entities – with separate operations, management, and regions to cover. 

Bangladesh Energy Regulatory Commission (BERC) is holding a four-day public hearing on gas price hike, which began on Monday. 

So far, five state-run companies have placed their proposals at the hearing. These are: Gas Transmission Company Ltd, Titas Gas Transmission and Distribution Company Ltd, Sundarban Gas Company Ltd, Bakhrabad Gas Distribution Company Ltd, and Jalalabad Gas Transmission and Distribution Company Ltd. 

Of them, Titas, Sundarban, Bakhrabad and Jalalabad, in their individual proposals, have made the same recommendations for the price hike, asking to increase the gas tariff by 80% for household users, 208% for power plants, 210% for industries, and 211% for fertilizer plants. 

This unified stand has drawn the attention of stakeholder, rights groups and business owners taking part in the hearing. They have asked why these companies have placed the same proposal, separately, when they have different infrastructure, operating costs, manpower and distribution amount. 

Losses and profits of these companies are measured separately as well, the stakeholders pointed out at the hearing.  

Raising this issue at Wednesday’s hearing, Omarjan Group Managing Director Mohd Shah Alam Sarker asked: “Why are you [the gas companies] proposing the same price hike rates when your company size and expenditure are different?”

No one from the BERC, or the companies that placed their proposals on Wednesday – Jalalabad and Bakhrabad – attempted to address Shah Alam’s question during the hearing.  

“It seems these gas companies are implementing the government decision to align the energy sector with its LNG (liquefied natural gas) policy, which is geared towards making rich people and businessmen more profits,” said Zonayed Saki, chief coordinator of Gano Sanghati Andolon who have been invited to attend the public hearing. “This is political, because the people who are associated with the LNG business are linked with politics.”

Speaking to the Dhaka Tribune on phone on Wednesday, Saki also termed the price hike proposals “illogical.”

“If the proposed gas prices are implemented, it will hurt the everyday living of all the citizens. However, the BERC has a technical committee, which will scrutinize the proposals,” he said. “Nonetheless, people should join us and protest the initiative to raise gas prices for the sake of the nation’s betterment.”


Also Read- Bakhrabad, Jalalabad too propose over 200% gas price hike for power, fertilizer plants


Ghulam Rahman, president of the Consumers Association of Bangladesh (CAB), called the proposals “irrational.”

“All these companies proposed the same rates. These proposals have no rational grounds,” he told the Dhaka Tribune over phone on Wednesday. “The BERC is an independent organization which is accountable to the law. They have to obey the rules and regulations. This price rising process is illegal to begin with. We have already raised this issue before BERC.”

Contacted, Jalalabad Gas Company Mananging Director Md Ehsanul Haque Patwary refused to make a comment and said: “I cannot say anything about it. You should ask the BERC.”

The Dhaka Tribune made several attempts to contact BERC Chairman Monowar Islam on Wednesday evening, but his phone was found switched off. 

Interestingly, Jalalabad placed its proposal during the second session of  Wednesday’s hearing, where none of the stakeholders and rights group representatives – i.e. Gano Sanghati Andolon, CAB, Communist Party of Bangladesh, Bangladesh Re-Rolling Mill Owners Association, Bangladesh Steel Mill Owners Association, BGMEA, FBCCI, and DCCI – were present. 

All these organizations have been invited by the BERC to take part at the public hearing.

Why is the public hearing taking place?

The BERC arranged the public hearing in response to the appeals made by different gas companies to raise the gas tariffs, on account of the impending LNG report to meet the growing national demand. 

Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) began the hearing on Monday with a statement about a projected annual loss of Tk24,540 crore in LNG imports.

Petrobangla, in its proposal, said the mother body had been purchasing each unit of gas from different upstream gas production companies at an average price of about Tk6.50, while each unit of LNG will cost Tk39.82.

Petrobangla Chairman Ruhul Amin said they would have to face a huge loss once it started to import 1,000mmcfd LNG from April this year to meet the country's gas shortage. “So it is essential to raise the gas prices to offset the losses,” he said. 

If approved, this price hike will be the second in the same fiscal year; the last one took place in October last year, although it did not affect the consumer end – the government paid Tk4,500 crore to the gas companies. 

However, according to the BERC guidelines, raising the gas prices more than once in the same fiscal year is illegal. 

The Consumers Association of Bangladesh has filed a writ in this regard with the High Court, who has set March 31 to deliver an order on the writ. 

Energy experts have also raised questions as to why the gas companies are asking to raise the gas prices when all of them, except for Sundarban, are making profits. 

According to the BERC guidelines, gas companies cannot ask for a price hike at the consumer end if they are making profits.