Study report suggests revising gas tariff

Shamim Jahangir

9 November, 2018 12:00 AM printer


A government-sponsored study recently suggested reviewing the natural gas tariff considering the estimated fossil fuel consumption of 8000mmcfd in the year 2041.

The Tokyo Electric Power Company Holdings (TEPCO) and the Mitsubishi Research Institute (MRI) jointly conducted the survey for the Energy and Mineral Resources Division (EMRD) with financial support from Japan International Cooperation Agency (JICA).

The report styled ‘Data collection survey on development infrastructure in power and energy sector’ was submitted to EMRD in October.

“The current gas tariff structure needs to be revisited as there is a gap between the supply cost and price,” the study said.

The report also suggested conducting further studies on the gas demand forecast and financial impact in due course.

Currently, Petrobangla is the sole entity permitted to import LNG. “The involvement of the private sector in LNG market is desirable,” the study noted.

Last month, Bangladesh Energy Regulatory Commission (BERC) announced that natural gas tariff would not be hiked now as Petrobangla could not import liquefied natural gas (LNG) as planned.

“We’ve decided not to hike natural gas tariff as Petrobangla could not import 1000mmcfd of LNG as planned until placing the tariff hike proposal,” BERC Chairman Monowar Islam said.   

Besides, National Board of Revenue (NBR) waived Tk 7,300 crore in supplementary duty and VAT on LNG import through issuing an SRO on September 18, 2018.

“The gas distribution companies will require Tk 3,100 crore to minimise their current loss on LNG import and for supplying the imported gas on subsidised tariff,” Monowar said.

He also expressed hope that the government will subsidise the loss.

The existing natural gas tariff is Tk 7.17 per cubic meter but the distribution companies would have required additional Tk 1.46 per cubic meter if the NBR hadn’t waived the SD and VAT, he added.

It will be important to develop capacity in the public sector, including energy and power strategy planning and operations and maintenance of assets, the study said.

It also suggested popularising electric vehicles to help reduce the use of fuel oil in vehicles.

 “Electric vehicles can spread rapidly in the place of fossil fuel vehicles depending on cost competitiveness,” it observed.

A general trend can be observed that the ownership of passenger cars start growing rapidly from the time when the country’s GDP per capita exceeds $5,000 after late 2020, it said.

Bangladesh’s electricity demand will soar to 68,660MW by 2041, the study estimates.