Govt okays proposal for reviewing gas supply agreement with KAFCO

Originally posted in The Business Standard on 26 May 2022


The Cabinet Committee on Economic Affairs (CCEA) today approved a proposal for reviewing the gas supply agreement with Karnaphuli Fertilizer Company Limited (KAFCO) under which the government is expected to get up to Tk1,000 crore as arrear.

The approval came from the 13th meeting of the CCEA this year held today virtually with Finance Minister AHM Mustafa Kamal in the chair.

Briefing reporters after the meeting virtually, Cabinet Division additional secretary Md Zillur Rahman Chowdhury said that following the proposal from the Energy and Mineral Resources Division, the existing agreement between the Karnaphuli Gas Distribution Company Limited (KGDCL) and the KAFCO would be reviewed.

Under the reviewed agreement, the government would get an amount of Tk900 crore to Tk1,000 crore from KAFCO as arrear.

Zillur said as per the earlier agreement, the government had to incur loss as the gas tariff was Tk12 for per cubic meter which has been increased to Tk14. Besides, the KAFCO would have to provide additional Tk1 for every $20 energy price hike in international market.

The Cabinet Division additional secretary said that the CCEA meeting approved another proposal from the Health Services Division for procuring necessary drugs from the state-owned Essential Drugs Company Limited under the Direct Procurement Method (DPM) for the upazila health complexes and union health and family welfare centers in Cox’s Bazar under the “Health and gender support in Cox’s Bazar district” operational plan.