Originally posted in The Business Standard on 24 March 2022
The hearing started on Monday on the Petrobangla and six gas distribution companies’ proposal demanding 117% average price hike at retail level
A four-day public hearing on the proposed gas price hike ended on Thursday drawing stark criticism from both the consumer representatives and other stakeholders.
While presenting their reasoning, participants including representatives from households, CNG stations, restaurants and industries voiced their stance against the gas price hike initiative.
Moreover, the state-owned gas production and distribution companies that pleaded for the price hike could not produce convincing arguments to the regulatory commission.
Md Abdul Jalil, chairman of the Bangladesh Energy Regulatory Commission (BERC), said the commission will announce its decision within 90 working days after scrutinising post-hearing documents and stakeholders’ opinions.
Jalil said, “Petrobangla’s proposal to increase the price of gas is not acceptable in terms of rationality, fairness and reality. Any option other than the price hike will be preferred. If not, then the price should be increased to a certain limit so that consumers do not face any hardships.”
The public hearing started on Monday on the Petrobangla and six gas distribution companies’ proposal demanding a 117% average hike in tariff at the retail level, as well as distribution charge hike of the respective distribution companies.
At present, the daily consumption of the gas is around 3,000 mmcf per day, of which 2,350 to 2400 mmcf comes from domestic gas fields and the rest is being imported from the Middle East which is known as Liquefied Natural Gas (LNG).
Of the imported LNG, around 100 mmcf comes from the spot market.
Therefore, Petrobangla proposed to increase the price to adjust the import cost of LNG which is being imported from the spot market.
However, consumer representatives and stakeholders protested the proposal claiming the hike is not rational for only 100 mmcf gas which is only 3% of the total supply.
“In the last two fiscal years, there were 12 to 13% system losses in Titas Gas Transmission and Distribution Company Limited. So, instead of price hike for 3% gas, we should ensure efficient use of the existing resource,” representatives said.
On the final day, BERC heard the proposals of Jalalabad Gas Distribution Company Limited and Karnaphuli Gas Distribution Company Limited.
Participating in the hearing, Moazzem Hossain Alalm, joint secretary general of Bangladesh National Party said, “Stop importing LNG from the spot market at higher prices. People’s financial condition is not in a good shape, even middle-income people are standing in long queues behind Trading Corporation Bangladesh’s (TCB) sale trucks hiding their faces with masks due to the soaring commodity prices. So, gas prices cannot be increased further.”
Earlier, officials of Jalalabad Gas Distribution Company Limited and Karnaphuli Gas Distribution Company Limited proposed to increase the gas price by an average 117% like other distribution companies.
Besides, they also proposed to increase the distribution charge of the per cubic metre gas.
However, the technical committee of BERC found that the Karnaphuli would need Tk2314.40 crore in 2021-2022 fiscal year, but it will earn only Tk2025.02 crore during the period.
Therefore, the company will need only Tk0.09 distribution charge for wheeling per cubic metre of gas, instead of the existing Tk0.25.
On the other hand, Jalalabad Gas Distribution Company Limited proposed to increase the distribution charge to Tk0.5518 per cubic metre from the existing Tk0.25.
But the BERC technical committee said the company will earn more revenue than its operational expenses. Therefore, its existing distribution charge could be reduced from Tk0.25 per cubic metre to Tk0.12.