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BERC rejects Titas proposal for gas price hike

  • Published at 09:09 pm August 8th, 2016
BERC rejects Titas proposal for gas price hike
Bangladesh Energy Regulatory Commission (BERC) has rejected the proposal of increasing gas prices, placed by Titas Gas Transmission and Distribution Company Ltd, saying that the company does not need to increase its distribution charges. Titas participated at the public hearing on gas price increase on Monday – the second day of the eight-day hearing – at the Trading Corporation of Bangladesh auditorium in Karwan Bazar, Dhaka. At the hearing, BERC technical evaluation committee, headed by BERC Director (Gas) AKM Monowar Hossain Akhand, observed that in the 2016-17 fiscal year, the total operating revenue of Titas is estimated to be around Tk1,077.34 crore. The estimated revenue is well above the required revenue of around Tk717.71 crore, considering around Tk0.3 per cubic metre as transmission charge for Gas Transmission Company Ltd (GTCL) on a cost-plus basis. This means Titas does not need to increase its distribution charges, the committee observed. Earlier, Titas submitted a proposal to increase gas prices by 87.6% on average. The company asked the BERC to increase domestic gas prices from the existing Tk600 and Tk650 for single and double burner stoves, respectively, to Tk1,100 and Tk1,200 – more than 80% increase in both the prices. It also asked to increase prices in the power sector, industries, commercial establishments, CNG filling stations, captive power plants and fertiliser factories. At the hearing, consumers' groups, business leaders and representatives of different organisations and political parties all criticised the proposal. A Matin Chowdhury, former president of Bangladesh Textile Mills Association (BTMA), asked the Titas delegates the reason behind low pressure in gas supply to the industries. Complementing that question, BERC Chairman AR Khan asked whether the abnormally low pressure in gas supply was the reason behind the recent system gain of Titas. Having said earlier that Titas had achieved 0.22% system gain in the 2015-16 fiscal year, recovering from a 0.32% system loss in 2014-15, Sankar Kumas Das, director (finance) of Titas, admitted that low pressure was indeed one of the reasons behind his company's system gain. “We have been using the same calculations for years; so low pressure in gas supplies have helped with system gain,” Sankar said at the hearing. “However, we have no control over gas pressure. We get it and we distribute it.” He added that Titas would look into the matter to resolve it. Meanwhile, former BTMA chief A Matin Chowdhury, who accompanied incumbent BTMA President Tapan Chowdhury at the hearing, said the proposed 130% hike in gas price in the captive power plants, used by spinners in textile industry for uninterrupted power generation, would badly damage the sector. Captive power plants account for around 17% of total gas consumption, according to Bangladesh Oil, Gas and Mineral Corporation, more commonly known as Petrobangla. Primary textiles consume 4% of the power generated by captive power plants. “We are selling our products at minimum prices only to keep our businesses afloat. The profit margin has fallen in the spinning and weaving industries,” said Tapan. Among others, Prof Shamsul Alam of Consumers Association of Bangladesh and Ruhin Hossain Prince of the Communist Party of Bangladesh spoke at the hearing as well.