Monday, 4 July, 2022
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Lower fertiliser, LNG cost to ease burden on state coffer

Govt approves proposal for reviewing gas supply deal with KAFCO

The government has cleared proposals for procuring fertiliser and LNG at a lower rate, a move which will ease burden on the state coffer due to a global energy price hike amid the Ukraine crisis.

Cabinet Committee on Government Purchase (CCGP) approved the proposals at a meeting held with Finance Minister AHM Mustafa Kamal.      

Under two separate proposals, 30,000 tonnes of bagged granular urea fertiliser will be procured from KAFCO and 33.60 lakh MMBtu LNG from Vitol Asia, Singapore. 

The cost of the fertiliser purchase will be USD$671, which is $205 lower than $876 the government had spent earlier for purchasing the same volume of urea fertiliser, informed Cabinet Division additional secretary Md Zillur Rahman Chowdhury.

Spiraling fertilier price was feared to shoot up the government’s subsidy burden over the next fiscal by a large margin.

“All are trying to lower panic because it will not only have impact on Bangladesh but also all the countries. Besides, excess panic may also destroy economic stability,” explained Chowdhury in reply to a question.

LNG price, on the other hand, declined modestly to $25.75 percent unit from $26.40 in the previous purchase, he informed. The total LNG purchase will now cost the government Tk 8.87 billion.

In addition, CCGP okayed a proposal for buying 5,000 tonnes of lentil for Trading Corporation of Bangladesh (TCB) at a cost of Tk537.5 billion with Tk 107.50 per KG. It will be procured Shabnam Vegetable Oil Industries Ltd, Zillur Rahman said.

Zillur said that the CCGP meeting approved a proposal from the Bangladesh Economic Zones Authority (BEZA) under the Prime Minister's Office (PMO) for awarding the contract of setting up a 50 MLD water treatment plant to the joint venture of ZHEC, BOW, SMEDRIC, Hong Kong with around Tk 4.40bn under the project for setting up water treatment plant and deep tube well at Bangabandhu Sheikh Mujib Shilpa Nagar.

The meeting also approved a proposal from the Ministry of Housing and Public Works for awarding the contract to Mazid Sons Construction Ltd for constructing a 25-storey commercial building at Green City Residential Complex with around Tk 1.92bn under the Rooppur Nuclear Power Plant project.

The meeting also approved a variation proposal from the Ministry of Housing and Public Works.

Earlier, a meeting of Cabinet Committee on Economic Affairs (CCEA) was also held with the finance minister in the chair. 

The Cabinet Committee on Economic Affairs (CCEA) approved a proposal for reviewing the gas supply agreement with Karnaphuli Fertilizer Company Limited (KAFCO).

Briefing reporters after the meeting virtually, Zillur Rahman Chowdhury said that following the proposal from the energy and mineral resources division, the existing agreement between the Karnaphuli Gas Distribution Company Ltd (KGDCL) and the KAFCO would be reviewed.

Under the reviewed agreement, the government would get an amount of Tk 9 billion to Tk 10 billion from KAFCO as arrear.

Zillur said as per the earlier agreement, the government had to incur loss as the gas tariff was Taka 12 for per cubic meter which has been increased to Tk 14.

Besides, the KAFCO would have to provide additional Tk 1 for every $20 energy price hike in international market.

The CCEA meeting approved another proposal from the Health Services Division for procuring necessary drugs from the state-owned Essential Drugs Company Ltd 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.