Discussion on loan
IMF wants to know about power-gas price hike
Petrobangla is suffering losses even after increasing the price of gas. And, despite the Power Development Board (PDB)’s appeal, the price of electricity hasn’t been raised.
These two government agencies provided this information in separate meetings with the International Monetary Fund (IMF) delegation. IMF has sought to know the government’s decision regarding the power and gas price hike.
After meeting with different agencies of the power and energy division, IMF this time met with the regulatory body, Bangladesh Energy Regulatory Commission (BERC).
The meeting was held at the BERC office on Sunday morning. The IMF delegation was apprised of the process of increasing power and gas prices.
Several BERC officials, present at the meeting, confirmed this to Prothom Alo. They said that IMF basically wanted to know about the price hiking process.
IMF has sought to know about the subsidies in power and gas sectors. In response to that BERC has said that the decision to provide subsidy is entirely up to the government.
They were interested in knowing about the functions of BERC, how it carries these functions out, how many times prices are fixed in a year and if there is scope to increase prices several times annually.
BERC in reply to that mentioned that there is scope in the law to increase prices several times. If the appeal is justified, the commission will take a decision following a public hearing.
IMF has sought to know about subsidies in power and gas sectors. BERC has said that the decision to provide subsidy is entirely up to the government.
The commission doesn’t decide on providing subsidy to anyone. They just fix the price to cover up deficit after figuring out the income and expenditure.
If the government then takes a decision to provide subsidy, prices are increased after adjusting with the subsidy.
In reply to the question if the rent (capacity charge) of the power plants is accounted for or not, BERC said it’s a part of PDB’s costs and so is always calculated. If any of the parties has an objection, the commission has a separate tribunal to settle that through a hearing.
In answer to IMF delegation’s question if journalists are present during BERC’s public hearings, BERC said that not only journalists, but all stakeholders of the sector are present. Even consumers’ representatives take part.
The government has to subsidise a lot in the power sector for not increasing the price. In regard to this, BERC said that PDB had appealed to increase electricity prices at a wholesale level but didn’t mention what will be the effect on the consumer level.
They didn’t evaluate what sort of pressure this will put on the economy either. So, despite agreeing on the issue of price hike, the commission couldn’t act on it.
At present, they are importing 380 million cubic feet of gas every day instead of 850 million cubic feet. That means there should be surplus funds for the gas import being reduced. Petrobangla has to answer, where that money went.
Apart from this, IMF also asked about Petrobangla’s losses. They were told that except for Petrobangla, all the companies of the gas sector are making profits.
Petrobangla requires additional funds for importing Liquefied Natural Gas (LNG). When IMF questioned if LNG import costs are taken into account when increasing the price, BERC replied in the affirmative. Earlier, they already had increased the price by mentioning that they import 850 million cubic feet of LNG every day.
However they brought gas for a lot lesser that that. Even this time, the price was hiked, taking into account 680 million cubic feet of gas import per day. At present, they are importing 380 million cubic feet of gas every day.
That means there should be surplus funds for the gas import being reduced. Petrobangla has to account for that money.
IMF met with Petrobangla on 3 November where it mentioned that gas price was increased once last June. Still, it’s losing Tk 7 to 8 on the sales of per unit (cubic metre) of gas at present.
In the last fiscal year (2021-22), Petrobangla recorded Tk 250 billion in deficit.
The government subsidised only Tk 60 billion. And the rest of the deficit was covered up by taking temporary loans from the energy security fund, retained earnings of the gas sector companies and gas development fund.
Earlier, the IMF delegation met with PDB on 2 November. There they asked PDB about options such as taking loans from private banks instead of subsidies and reducing power plant capacity charge.
PDB said that taking loans from private banks would increase PDB’s burden even more.
Rahul Anand, head of IMF’s Asia Pacific Department, led the four-member delegation of the agency during their meeting with BERC on Sunday.
The BERC team, led by the commission's chairman Abdul Jalil, comprised members Maqbul-E-Elahi-Chowdhury, ABM Faruque, Mohammad Bazlur Rahman, Md Kamruzzaman and directors.
Abdul Jalil confirmed to Prothom Alo that they have met with the IMF delegation and told them about the entire process of increasing power and gas prices.