• Wednesday, Nov 20, 2019
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Seminar on energy pricing and its impact: Experts, business leaders decry govt move for gas price hike

  • Published at 04:03 am April 12th, 2019
State Minister Nasrul Hamid
State Minister for Power, Energy and Mineral Resources Nasrul Hamid speaks in a seminar on energy pricing in Dhaka on Thursday Dhaka Tribune

Experts, business leaders decry govt move for gas price hike

Noted experts and leading business leaders yesterday voiced concerns over the planed gas price hike, saying the move will rather encourage costly fuel import and badly impact the industrial sector for soaring cost.

A number of energy experts said the government might consider exploring wells for meeting the growing demand of gas, while business leaders think a realistic decision regarding gas prices will help them avert soaring cost.

The observations and calls came in a seminar on “Energy Pricing: Impact on Industries” held at the auditorium of the Dhaka Chamber of Commerce and Industry (DCCI).

Distinguished geologist Badrul Imam said gas was not being extracted in proportion to the skyrocketing demand in the country.

“Instead of exploring gas fields and wells, the government is more interested in importing gas,” he said.

The expert also said the respective agency lacks modern technologies to explore and extract gas with   policymakers believing that there will be no significant success in exploring and extracting.

Ijaz Hossain, chemical engineering professor at Bangladesh University of Engineering and Technology (Buet) said the industrial sector might suffer up to a 25.5 % fall in profit if the planned hike takes place.

He suggested leaving the energy pricing issue to the open market for competitive prices and to ensure that the players involved cannot charge the consumers at all levels exorbitantly.   

The Buet teacher also recommended that the government initiate the extraction of coal on a large scale as coal will curb dependency on both liquid fuel and gas significantly.

A leading importer of consumer products, Abdus Salam said the government is neither making any improvement in the onshore gas fields, nor in the offshore blocs.

He said exploring and extracting indigenous gas would massively help overcome the gas crisis, benefitting the consumers since it would cut the dependency on imported expensive gas.

Humayun Rashid, managing director of Energypac Power Generation Ltd proposed that the private sector be tasked with the job of gas transmission and distribution that will effectively squeeze the system loss in the gas sector.  

On a separate note, Rashid urged the government to facilitate the large consumers with a separate gas tariff pricing rates, and incentivizing them for using electricity in the off-peak hours, especially from 11pm.

Abu Hurairah, former vice president of DCCI said the government must take strict action against the people and institutions accused of defaulting utility bills.

State minister’s take

State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the government was not going to increase the gas prices, but adjust the prices.

“Instead, the plan is to adjust the gas prices against a rising subsidy in the energy sector,” he claimed, adding: “The move will continue”.

The junior minister told the seminar that the government was giving a staggering Tk6,000 crore subsidy annually in the gas sector.

“This is happening because we are selling each unit gas at Tk6, against the production cost of around Tk9,” he said.

“Also, we are charging the power plants merely Tk2 for each unit of gas as our  aim is to bring the entire country under 100% power supply network very soon,” Nasrul furthered.

5-6 years to get rid of subsidy

The state minister said it might take another five to six years to get rid of the subsidy regime.

Defending what he terms price adjustment, Nasrul said: “It will not be possible for the government to keep everyone in the comfort zone.”

Saying that the demand of gas has risen by more than 1,000 mmcfd in the last decade, he said: “This is why we started importing LNG. You will get it at cheaper rate as the LNG will be mixed with local gas.”

‘Gas price hike won’t push up power tariff’

Nasrul Hamid said the increase in gas prices will not impact the electricity tariff.  

Terming the pieces of power and energy in Bangladesh the cheapest in the world, he said: “We will cut the prices of power if used after 11pm since a huge volume of electricity remains unused in the off-peak hours.”

Some 5,000MW electricity of the off-peak load remains unused, he stated.

Bangladesh currently faces a shortage of 1 billion cubic feet of gas a day (bcfd), while the demand is around 3.7 bcfd. Considering the overall situation, the government started importing LNG. Qatar is supplying the super-chilled fuel item under a deal to export 2.8 million tons of LNG annually for the next 15 years to Bangladesh.

Bangladesh is also in talks with several other countries for importing LNG. A report by Copenhagen-based research firm Ramboll says Bangladesh will need annual imports of about 30 million tons of LNG by 2041 to meet rising demand for energy in the country.

In order to adjust the expensive fuel prices, the government moved to increase gas prices.

The gas transmission and distribution companies have proposed nearly doubling the average tariff to Tk12.19 per cubic metre from Tk7.35.

The Bangladesh Energy Regulatory Commission (BERC) held a four-day public hearing from March 11 in this regard, with five out of the six gas distribution companies in the profit zone.