Anisul Islam Noor :
Businesses and rights group have urged the Bangladesh Energy Regulatory Commission (BERC) to abstain from giving verdict over gas tariff hike until the issue of imposing Supplementary Duty (SD) is settled.
BERC is now scrutinising after end of hearing on Thursday over the proposal of gas price hike submitted by seven gas distribution entities of Petrobangla.
They said, imposing of 40 percent SD and VAT on the sale of natural gas tariff is ‘illogical’, as SD is usually imposed on ‘luxury or less-required’ items to discourage their use. But natural gas is not a luxury item.
They emphasized to check gas pilferage and ‘misuse’ by the state-run gas entities, and ensure transparency on the use of public money, especially of Gas Development Fund (GDF).
BERC Chairman A R Khan assured them of taking any decision in this regard after scrutinising all proposals and opinions from experts and stakeholders. “I will not say that the tariff of natural gas will be hiked. BERC will not take any decision on the basis of emotion.”
The Commission will announce its decision before press within the next 90 days, he said.
“As the BERC verdict is not appealable, we will analyse the impacts first before giving any verdict,” the BERC Chairman added.
BERC member Md Maksudul Haque, however, said, “There will be a hike [a bit] for sure. And it might not be a burden for the people. We must be pragmatic.”
On the concluding day of the public hearing, the state-owned Petrobangla and its subsidiaries – Bangladesh Gas Fields Company Ltd (BGFCL), Sylhet Gas Fields Ltd (SGFL) and Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) – placed their respective proposals to raise bulk tariff rate of natural gas.
Petrobangla in its proposal said the price of natural gas, being purchased from international oil companies (IOCs), has almost doubled to Tk 8.759 per cubic meter (cm) from previous Tk 4.98 per cm, mainly due to imposition of SD and VAT on the IOCs’ gas.
Petrobangla had not been paying VAT and SD to the government against the sale of natural gas, being produced by the IOCs before fiscal year (FY) 2015-16.
The government exempted the IOCs from paying VAT and SD through a statutory regulatory order (SRO) in 1993. But National Board of Revenue (NBR) termed it as an ‘anomaly’. NBR lobbied with the government to collect SD and VAT, and succeeded after years of negotiation, said a senior Petrobangla official.
Opposing the gas tariff hike proposals Energy Adviser of Consumers Association of Bangladesh (CAB) Prof Shamsul Alam said, NBR has no authority to impose SD and VAT on the sale of natural gas.
He also opposed keeping GDF fund as Fixed Deposit Receipt (FDR) with banks instead of investing it for developing the country’s energy sector. Prof Alam also sought action plan from the state-run gas entities to utilise public money.
Businessmen also opposed any further hike in natural gas tariff, saying that it will have adverse impact on industrial sector.
The government should consider tapping benefits from the growing export earnings instead of the earnings trough raising tariff, they opined. The public hearing started on August 7. In the tariff hike proposals, the state-run gas marketing and distribution companies sought to hike natural gas tariff at the similar rate – for metered domestic users to Tk 16.80 per cm from existing Tk 7.0 per cm, registering the maximum hike by 140 per cent.
For a single-burner stove, they proposed to increase the tariff to Tk 1,100 a month from current Tk 600, while for a double-burner stove the tariff as proposed will Tk 1,200 from Tk 650.
The state-run gas companies sought to raise natural gas tariff for captive power plants to Tk 19.26 per cm from existing Tk 8.36 per cm.
The tariff for compressed natural gas (CNG) has been proposed to Tk 49.50 per cm from existing Tk 27 per cm.
For power plants, the tariff as proposed is Tk 4.60 per cm from Tk 2.82 per cm. For fertilizer factories, the new tariff as sought is Tk 4.41 per cm against existing Tk 2.58 per cm.
The state-run gas entities have proposed to increase natural gas tariff for industries to Tk 10.95 per cm from existing Tk 6.74 per cm.
For commercial users and tea estates, the new natural gas tariff as proposed is Tk 19.50 per cm from Tk 11.36 per cm and to Tk 10.50 per cm from existing Tk 6.45 per cm respectively.
The country’s energy regulator last raised natural gas tariff on an average by 26.29 per cent, which came into effect from September 1, 2015.
