The Finance Ministry has given its consent to provide Tk 20.0 billion to the Petrobangla from Gas Development Fund (GDF) to import liquefied natural gas (LNG).
An official order reveals that as per the proposal of the Energy Division, the Finance Ministry agreed to provide the fund as a loan to the state-owned Petrobangla.
The approval from the Finance Ministry came against the backdrop of the severe fund crisis Petrobangla has been facing following the excessive price hike of gas in the international market as a fallout of the Russia-Ukraine war, reports UNB.
The price of LNG has crossed US$39 per MMBtu from below US$10 after the Russia-Ukraine war began on 24 February 2022.
About the Finance Ministry’s approval, Consumers Association of Bangladesh (CAB) CAB Vice President M Shamsul Alam said this is an indication that the government is in a serious crisis in dealing with the energy sector.
Recently the Energy Division announced its decision not to import any LNG from the international spot market because of the price hike.
As a result, it has to go for reducing power generation from gas-fired plants that forced the power entities to resort to planned load shedding.
However, it continued importing LNG from Oman and Qatar under long term contracts where price is fixed, but varies to some extent on different conditions.
Now, it’s not clear whether Petrobangla will use the new fund to resume import of LNG from the spot market or utilise it to import gas from long-term suppliers.
The Gas Development Fund (GDF) was created by the order of the Bangladesh Energy Regulatory Commission (BERC) a few years back to allow the Pertrobangla to receive additional money with gas bills from the consumers to use the fund for gas exploration in the country.
The BERC also created some other funds by the consumers’ additional money and the regulator is highly against the use of such funds for any other purpose than gas sector development.
But all operation of such funds was taken up by the Energy Division. But the Petrobangla used some of the funds for different other purposes while deposited to the government exchequer as per a Finance Ministry order.
per the current arrangement, if the Energy Division or Petrobangla wants to use the fund for any purpose, it has to take permission from the Finance Division.
The BERC is against the operation and control of the Energy Division on such funds.
The BERC in June directed state-owned Petrobangla to return a total of Tk 122.27 billion to its two original funds—the energy security fund (ESF) and the Gas Development Fund (GDF).
The energy regulator’s latest directive which came as the BERC Order No-2022/7, in detail, was released on June 27 and uploaded on its website on the same day.
As per the BERC Verdict, the Petrobangla has to return Tk 92.27 billion to ESF Fund and Tk 30.0 billion with interest to the GDF fund which the organization had taken away and used for different purposes.
The verdict did not dictate a specific date for the Petrobangla as to when it has to return the funds.
The order came as a follow-up of the public hearing on gas prices held on March 21 in the city’s BIAM Auditorium where different consumer right groups, including Consumers Association of Bangladesh (CAB) termed the ESF and GDF fund as consumers’ money which they paid in addition to their bills for gas field development and security purposes.
The CAB and other right groups pleaded with the BERC to return the amount to the original funds and ensure its use only for gas field development and the gas sector’s security purpose through a transparent way which will be monitored by consumers’ representatives.