As of 22 February, Petrobangla could not submit the energy division’s approval. BERC director (gas) Mohammad Ali Biswas said Petrobangla has been asked to submit the letter of approval. If the letter is not submitted production cost would be projected based on prior cost.
Seventy three per cent of the country’s gas supply comes from domestic gas fields. Currently, three local companies and two multinational companies produce gas. Petrobangla buys gas from the foreign companies as per contract signed between both parties. The energy division fixes the production cost of per unit gas produced by three state-owned companies based on proposal placed by Petrobangla.
Speaking to Prothom Alo, Petrobangla chairman Nazmul Ahsan said, the proposal on gas price increase has been sent to the BERC after informing the ministry.
Documents that Petrobangla sent to BERC show Petrobangla purchases gas at Tk 2.90 a cubic metre form foreign company Chevron. For three local companies, Petrobangla sets a production cost per unit of gas instead of a price.
Currently, Petrobangla spends Tk 0.70 a unit for gas produced by Bangladesh Gas Fields Company Limited (BGFCL), Tk 0.20 a unit for gas from Sylhet Gas Fields Limited (SGFL) and Tk 3 a unit for gas from Bangladesh Petroleum Exploration and Production Company Limited (BAPEX).
Petrobangla proposed 26 per cent rise in production cost of BGFCL to Tk 0.88 a unit. The BGFCL made a profit of Tk 2.15 billion (215 crore) after tax in 2020-21 fiscal.
Speaking to Prothom Alo, BGFCL managing director Md Taufiqur Rahman said production costs increased by Tk 0.21 a unit. The BGFCL may not incur loss this year but the company may face loss after the payment of loan instalment starts next year, he added.
Petrobangla proposed 69 per cent rise in production costs of SGFL to Tk 0.33 a unit. The SGFL made a profit of Tk 2.36 billion (236 crore) in the last fiscal.
SGFL managing director Md Mizanur Rahman told Prothom Alo gas production has dropped. Exploration and development of gas wells is being carried out to increase gas production. Overall, production costs of per unit gas has increased, he added.
In addition to exploring gas on land, BAPEX also produces it. Petrobangla proposed 52 per cent rise in production cost of BAPEX to Tk 4.50 a unit. BAPEX made a profit of Tk 170 million (17 crore) last year fiscal.
BAPEX allegedly increases gas price by appointing foreign contractors with high fees to explore gas. Once the new proposal is approved, price of gas produced by BAPEX will be 57 per cent more than Chevron’s price.
Speaking to Prothom Alo, BAPEX managing director Mohammad Ali said there was a very little profit last year. All costs including production has increased. An increase in gas price has been proposed on logical grounds taking everything into consideration, he added.
BERC will hold a public hearing on gas price hike on 21 March. The technical evaluation committee formed by BERC has already started working to verify the rationality of the proposal.
The commission also sought all documents favouring income and expenditure from Petrobangla. BERC chairman said Abdul Jalil said the commission would not consider gas price hike at production level with the letter of approval.
The Consumers Association of Bangladesh (CAB), however, said the government said 850 million cubic feet of LNG would be imported a day when they raised gas price in 2019. But less than half of it has been imported. This time, production cost has also been assessed based on 850 million cubic feet of gas. There is no justification in raising the price of gas produced locally amidst the import of gas with high price.
A source at Petrobangla said 45 cubic feet of gas would come daily from the long-term contract. A cost has been projected to import 45 LNG cargo from spot market to meet the remaining demand. Six LNG cargo have arrived so far and 14 more LNG cargoes might be purchased. That means there will be 25 less LNG cargo than the projection of Petrobangla to the BERC.
Speaking to Prothom Alo, CAB senior vice president M Shamsul Alam said Petrobangla wants to raise gas prices despite three local companies making profit and there will be no public hearing on it. Gas prices will increase like WASA. Besides, excess price of LNG has also been projected like previous times. Petrobangla wants to increase gas prices at the consumer level by providing false data, he added.
This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna