Regulator overlooks users’ interest by calculating higher LNG supply
LNG is imported at a high cost and is added to the grid because Bangladesh’s own natural gas supply has been dwindling, creating gas crisis
Call it callousness or hoodwinking the people, the Bangladesh Energy Regulatory Commission has increased gas price based on completely wrong calculation of costly LNG supply to the gas grid line.
In hiking gas price by about 32 percent on average from July 1, the regulatory body mentioning supply of 850 million cubic feet (mmcf) of liquidified natural gas (LNG) a day, but in reality, the supply is only 566mmcf.
LNG is imported at a high cost and is added to the grid because Bangladesh’s own natural gas supply has been dwindling, creating gas crisis. This required hiking gas price if subsidy on gas was to be avoided.
But the regulatory commission, whose mandate is to ensure transparency in the management, operation and tariff determination and to protect consumers’ interest, calculated the latest price hike based on such erroneous figures.
Bangladesh has two Floating Storage of Regasification Units that convert LNG into gas in Cox’s Bazar with the capacity of supplying 1,000mmcf of gas per day.
But the pipelines to carry the gas to the grid are not ready and only half the capacity of the regasification units can be used.
The Energy Division took a 79km pipeline project to channel re-gasified LNG from Moheshkhali of Cox’s Bazar to Anwara of Chattogram.
The project was to be completed by last December. But the Gas Transmission Company Limited (GTCL), which is implementing the project, said it will be done by July this year.
“We are already done with 56 kilometres out of the 79km pipeline. The project will be completed before August to supply imported LNG to the national gas transmission grid,” said project director Ariful Haq Fakir.
But in Bangladesh, delay in project implementation is commonplace. This project has already been delayed by 7 months, and the pipeline being built needs to cross one more river out of a total of seven.
This means consumers will bear the cost of an additional 284mmcf of gas per day without actually getting the gas because of the latest tariff hike.
In terms of money, customers will have to pay an extra Tk233 crore a month and if the pipeline is delayed further, they will be paying even more.
But the regulatory authority was supposed to protect customers’ interest and make the price hike effective after the full gas supply was ensured.
Experts say it is unethical to charge customers for gas that has not been supplied yet.
“This is not an ideal way to increase gas price. It would have been better for both customers and distribution companies if the option of an automatic price adjustment was made available,” said Professor Mohammad Tamim, an energy expert and pro-vice chancellor of Brac University.
“But the commission can decrease the price by limiting the system losses of distribution companies,” he added.
However, the commission argued that they have considered 850mmcf for the whole fiscal year when tariff was hiked. The release order says LNG supply will reach 650mmcf by July and 850mmcf by August.
Commission Chairman Monowar Islam said: "We have considered the interest of both the customers and the distribution companies. Gas supply will reach 900mmcf by March 2020.”
The increased tariff also violated a provision of the regulatory commission act that says tariff determined by the commission shall not be revised more than once in a fiscal year, unless there is change in the prices of energy, including any other changes.
But the latest hike comes just after eight months of the previous announcement made on October 16 last year.
M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, said: “As a regulatory body, the commission cannot do this injustice to customers. The customers are already paying in the form of Energy Security Fund.”
“We have already filed a case demanding justification of the previous hike order. We are hopeful that the court will consider our petition,” he added.