The tariff of natural gas is likely to go up in the coming days as the government has proposed imposing a 100 percent supplementary duty (SD) on its import in the next national budget placed in Parliament on Thursday.
Although the government has a plan to withdraw SD from the import of furnace oil and diesel, the collection of SD on the import of natural gas may raise the production cost of industrial units as well as electricity generation.
According to Bangladesh Power Development Board (BPDB), the supply of natural gas to power plants is not sufficient. So, the electricity generation from gas-fired plants has come down to 6200MW on an average against the capacity of 11,522MW.
If there’s an overcapacity of 1000MW gas or liquid fuel-based power plants, BPDB’s fixed expenditure shall rise by $120-144 million per year, according to the International Monetary Fund (IMF).  
A BPDB official said the government has a plan to meet the natural gas demand for feeding electricity through importing liquefied natural gas (LNG).
The government’s proposed treasury bill may push the electricity generation cost further, he said, adding that the BPDB is yet to pay Tk 360 billion outstanding bills in public and private sectors. 
The proposed SD on the import of natural gas will increase the burden of the BPDB as it pays the fuel import and auxiliary cost as a pass through electricity bills.
Talking over the issue, energy expert Prof M Tamim said the energy prices always changeable. “The government may adjust SD for the natural gas to reduce the loss in electricity generation,” he said.
The country’s de-rated electricity generation capacity is 22,566MW, according to the Power Division. The IMF has projected a requirement of Tk 380,311 million subsidy for the power sector in fiscal year 2023-24.
About the proposed withdrawal of SD from heavy fuel oil (HFO) and diesel, energy expert Prof Ijaz Hossain welcomed the government’s move, saying this will bring down electricity generation cost in HFO-based power plants.
The government for the first time imposed tax and duties on the volume of imported diesel and furnace oil in the proposed budget.
Bangladesh Independent Power Producers’ Association (BIPPA) President Faisal Khan also supports the government move to withdraw SD from the fuel import for electricity generation.
He said the private power producers may have to pay an 18 percent duty, which is worth Tk 9,100 per metric tonne.
Energy Finance Analyst for Bangladesh of Institute for Energy Economics and Financial Analysis (IEEFA) Shafiqul Alam said there is less focus on the development of the local energy sector and hence the import dependence will continue. “Without significant investment in renewable energy and local gas exploration, it’ll be difficult to cut subsidy of the power sector,” he said.
The new duty structure for petroleum will help stabilise the price in the local market, he said.
Despite the impacts of growing reliance on imported fossil fuels, 97 percent allocation is given to the power sector against 3 percent for energy sector, Shafiqul added.