Thursday, 30 June, 2022

LNG Subsidy Policy 2022 on the cards

The government is going to formulate an LNG subsidy policy aimed at determining the actual need of import and required subsidy or funding.

Energy and Mineral Resources Division (EMRD) has taken the initiative as per the directive of the Prime Minister Office (PMO) as the imported liquefied natural gas (LNG) market became volatile due to the Russia-Ukraine war.

According to the sources related with the matter, the PMO asked the EMRD to prepare a “business model” to import LNG with the consent of the Ministry of Finance.

Then, the PMO said the EMRD will follow the model of state-owned Bangladesh Petroleum Corporation (BPC) which meet the demand of 6.5 million tonnes of petroleum fuels through import.

According to Petrobangla, it will require to pay over Tk 442.65 billion against the bills of imported LNG considering the import of 8782.46 mmcm from a volatile market in the current fiscal year. It was only Tk 296.59 in the fiscal year 2019-2020, it said.

The government has an allocation of Tk 190.93 billion for LNG import in the current fiscal year.

The state-owned gas distribution companies proposed to increase the natural gas tariff by 117 percent at the retail level in February, 2022.      

The Ministry of Power, Energy and Mineral Resources, however, held an inter-ministerial meeting virtually on Thursday last on a draft LNG Subsidy Policy 2022.

According to the draft, the demand of LNG import will be fixed in the beginning of the year.       “We have a plan to adjust the subsidy in every three months as like as state-owned Bangladesh Power Development Board (BPDB),” said an official who attended the meeting.

He said that the EMRD was yet to determine how to address the loss.

The BPDB is getting the subsidy in terms of loan through approval of the Finance Division.

The EMRD on Tuesday asked to review the draft as it will also address the issue.

The ministry also formed a committee headed by additional energy and mineral resources division secretary Dr. Moha. Sher Ali.

The committee already submitted a draft that said the subsidy of LNG import will be determined on imported LNG price with duties, tax at source, re-gasification cost, financing cost and operational cost.

The meeting also discussed to deduct about 7 percent of tax at source of LNG and 15 percent value added tax.

But EMRD officials said the NBR will take the decision in this regard.     

Justifying the subsidy, the EMRD draft said the subsidy would help to increase production in industry as well as create employments.