Immediately after the first consignment of liquefied natural gas (LNG) arrived at the Chottogram port, state-run gas distribution companies submitted proposals for gas tariff hike to the energy regulator.
Gas prices, according to reports, are set to register a two-phase rise this year although 28.32 million cubic metres of pricy natural gas would be added to the daily national supply from imported LNG. Only last year, Bangladesh Energy Regulatory Commission (BERC) had raised gas prices by 22.7 per cent on an average in two phases last year.
This time, the distribution companies have sought to double the gas tariff for all consumers, excepting households, at the first phase. The regulator took into cognisance the tariff hike proposals after initial scrutiny.
The commission might announce a schedule for holding public hearings against the proposals and invite stakeolders and consumers to oppose and protest against the pleas soon thereafter.
Bangladesh got its first LNG cargo on April 24 as the US-based Excelerate Energy Bangladesh Ltd brought in its floating, storage and re-gasification unit (FSRU) carrying 133,000 cubic meters of lean LNG from Qatar's RasGas. According to an estimate, the government will need US$844.20 million (Tk 69.22 billion) in one year to import a total of around 1,000 million cubic feet per day (mmcfd) equivalent of LNG and its re-gasification in two under-construction FSRUs (floating, storage and re-gasification unit).
The government says that is the reason for giving a nod to the floating LNG terminal and LNG re-gasification plant. The financial parameters of gas sector reveal that the project is not financially viable with a very low domestic gas price. For that matter, a thorough financial analysis should be done to find the viability of LGN in the context of Bangladesh. The effect of price and also the pipeline gas quality need to be thoroughly examined.
The fact remains that the country is suffering from severe electricity and gas shortages since long. Grid based power shortages result in load shedding and expensive diesel generation. Residents, industrial and power users, all struggle to get gas. Domestic gas supply has already started to decline. Pipeline pressure is very low in most cases. All these factors are impacting upon the country's economic growth negatively.
The Implementation Monitoring and Evaluation Division (IMED) of the planning ministry said in a report that illegal connections and illegal meter by-pass under the behest of influential people are one of the causes for gas sector system loss. While the authorities failed to reduce the system losses, the study found other reasons, including low gas pressure, inaccuracy of the metering system and equipment and leakages in the distribution network including customer service line. All these are responsible for anarchy in the sector.
The government does not need to give subsidy to the gas sector as Titas Gas is reported to be in the green since 2007. It is also running on huge profits every year since then. The selling price of gas is more than the cost of production. But the alleged system loss is eating into the vitals of the Titas Gas administration.
Allegations of getting gas connections legally or illegally are galore at a time of total government ban on new connections. Some entrepreneurs say they had given millions of taka for getting gas connections as bribes to a section of corrupt Titas Gas employees. Allegations have it that corruption in Titas has taken an institutional shape.
A taskforce observed that it had received allegations against Titas of anti-people and anti-state activities, mismanagement in marketing gas and causing financial loss to the government through fraudulence in collecting revenue. It also found mismanagement in gas transmission and distribution process. Cases of harassment of the subscribers, administrative and financial irregularities in the organisation were also detected by the taskforce.
Stakeholders in the energy sector blamed corruption committed by a section of Titas employees for the increase in the number of consumers during the period of ban. Thousands of illegal gas lines were given for domestic use during that time. A rough estimate says more than 700,000 or 35 per cent new consumers have been added to the list in a single year.
The state-owned gas distribution companies, according to reports, have surplus money and are capable of carrying out development activities in the sector on their own. If this is the case, there is no justification of any hike in gas price. The consumers should not be at the receiving end of being burdened with renewed pressure of price hike when prices of all essentials are soaring.
The fact remains that if the decision to raise gas price in the name of soaring import prices on account of LGN imports, the consumers will be subjected to endless sufferings. The government should give subsidy to the sector in order to save the teeming millions from the onslaught of price spirals of the essentials.
All said and done, gas price hike at this stage will be unethical. The low and middle-income groups will find it difficult to make ends meet, with the prices of consumer goods going out of their control. Why not a moratorium on fresh gas price hike?