Entrepreneurs consider the government's policy decision to increase gas prices in industries by 152 percent or two and a half times in one step as a step to stop the country's production. They describe such steps as suicidal in the country's industrial sector, which is facing various crises.

Experts in the sector also believe that a two and a half times price hike is unacceptable without reducing the existing system losses through gas leakage and a large number of illegal connections against Petrobangla and adjusting subsidies.

For a long time, industrial owners are going through a difficult time than at any time in the past due to various reasons including the dollar crisis, high interest rates and worker dissatisfaction. The initiative to increase gas prices in industries by 152 percent or two and a half times is like a 'stab in the back'.

Industrial owners complain that they are not getting uninterrupted gas in their factories even after paying the additional price. In this situation, many are even thinking of closing down their businesses due to the decision to increase gas prices again. Some say that trading business is much better than setting up an industry and running into danger.

Experts say that it remains to be seen whether new entrepreneurs in the energy sector will be able to export to the market at such a high price. This is a challenge for newcomers.

Industrialists say that the proposed increase in gas prices in the industry will further increase the pressure of inflation. No entrepreneur in the industrial sector will think about setting up a factory with a new gas connection. In this situation, there is no question of sustaining the industry. New entrepreneurs will not be able to survive in the competitive market in any way. This will definitely have a negative impact on the industry.

Entrepreneurs believe that the proposal to increase gas prices will be considered as a view of policymakers not to sustain the manufacturing sector in Bangladesh in the future.

They say that if gas prices are increased again, gas-dependent factories will have to be closed. Bank loans have now reached 14.5 to 16 percent. If gas prices are increased again, the industrial sector will be on the verge of collapse. Millions of workers in the industrial sector will become unemployed.

Currently, industrial customers have to pay 30 taka per cubic meter of gas and 30 taka 75 paisa for captive power (own electricity used in the industry). Recently, the proposal sent by Bangladesh Oil, Gas, Mineral Resources Corporation (Petrobangla) to BERC proposes to increase the price of gas to 75 taka 72 paisa per cubic meter. In this, the entire gas bill for new connections will be at the new price. However, the old industrialists will get some relief in the proposal.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem told a national daily, "I can say this much about the new policy that the government is going to make that no entrepreneur in our sector will think about setting up a factory with a new gas connection. The 30/31 taka gas bill that we have to pay now is what we are struggling to pay. In this case, if this price is 70/75 taka, there is no question of sustaining the industry. This will definitely have a negative impact on the industry."

Economist Dr. Zahid Hossain told the media that if the gas price hike proposal is implemented, there will definitely be a blow to production costs. As a result, the pressure on inflation will increase further. There is no way to deny this. He said, "There are many complaints against Petrobangla, starting from gas leakage. Gas connections are also given illegally. The government is not getting the bill for it."

He also believes that price hikes cannot be supported without ensuring the accountability of the institutions in these places.

Energy expert Professor M. Tamim said that increasing gas prices will definitely hinder new gas-based industrial entrepreneurs. New entrepreneurs will not be able to survive in the competitive market in any way.

Earlier, on January 18, 2023, the gas price in industry was increased three times by an executive order. The price of gas per unit was increased from Tk. 11.98 in large industries and Tk. 10.78 in small industries to Tk. 30. In captives, it was increased from Tk. 16 to Tk. 30 per unit. Then, from February 2024, the price of each unit in the captive was set at 30 taka and 75 paisa. However, Muhammad Fawzul Kabir Khan, Adviser to the Minister of Power, Energy and Mineral Resources, justified the increase in gas prices and told reporters, "It is not possible to buy gas at Tk. 75 and give it at Tk. 30. We already have to pay a subsidy of Tk. 20 thousand crore. We do not want to increase it further."

Finally, the Energy and Mineral Resources Division has approved the metering system proposed by Petrobangla. The pro-rata system, which has been in place for a long time, has been canceled and gas bills have been ordered to be billed according to the meter.

A letter signed by Md. Sheikh Shahidul Islam, Deputy Secretary of the Energy and Mineral Resources Division, has been given approval in a cryptic manner from January 1, 2023.

Although the Gas Transmission Company Limited (GTCL) has been measuring for a long time, there was no system for measuring the time of supply. The new system has said that the metering system will be introduced at all levels. From now on, just as GTCL is receiving gas according to the meter, the distribution company will have to receive it through the meter.

The letter from the Energy and Mineral Resources Division has directed to take effective measures to stop illegal connections and gas theft to reduce system losses. It has been said that the amount of system losses due to administrative weaknesses should be identified and action should be taken against the officials and employees involved. At the same time, those who will play a positive role in reducing system losses should be evaluated.

The letter has given 4 instructions to overcome the financial losses of GTCL (Gas Transmission Company Limited), which has introduced the metering system. GTCL can suspend the payment of the gas bill for that amount until BERC decides on who will bear the bill for the gas used as fuel for Muchai Compressor Station, how the previous bill will be adjusted.

It has been recommended to immediately re-determine GTCL's condensate transmission charge, and to share the transmission charge before transferring all the high-pressure transmission pipelines that are not built under the ownership of GTCL to GTCL.

Considering the amount of technical system loss that GTCL is experiencing and may experience in the future due to the introduction of meters at the off-transmission stage, GTCL will apply to BERC for approval of technical system loss.

So far, GTCL has made a huge profit by shifting the system loss to other companies. At the same time, due to the high volume, it has collected more transmission charges. From that mountain of profit, it has been getting profit bonuses ranging from 2 to 6 lakh taka every year. When Petrobangla started the process of installing meters at the supply level and introducing a measurement system, tensions started with the former chairman (Janendra Nath Sarkar). GTCL threatened to go on strike and even filed a written complaint against Petrobangla.

On the other hand, Petrobangla's proposal sent to the Energy and Mineral Resources Division said that although GTCL supplies gas to distribution companies through off-transmission points, it was not possible to determine any difference in gas in GTCL's transmission system, either technically or otherwise, as most of the off-transmission points did not have direct gas metering. This would have made it impossible for the distribution companies to determine the actual purchase amount and the losses or differences in the transmission system would have been merged with the distribution company's own differences. In the current system, gas production companies, IOCs and RLNG are receiving gas from sources through metering at a total of 20 points and supplying it to distribution companies through 64 off-transmission points.

A statistic of the purchase and sale of gas transmission and distribution companies after the installation of meters shows that GTCL's system loss was 2.95 percent in January 2023, 2.99 percent in February, 3.10 percent in March and 2.41 percent in April. On the other hand, according to the meter, in March (2023), Titas Gas Transmission and Distribution Company lost 10.78 percent, Bakhrabad Gas Distribution Company lost 6.38 percent, Jalalabad Gas Transmission and Distribution System Limited lost 1.34 percent, and Karnaphuli Gas Distribution Company lost 2.05 percent. The Petrobangla letter mentioned that the 6 distribution companies had a gas loss of 161 million cubic meters. At the same time, instructions were sought to reduce system losses according to the meter. On the other hand, the Bangladesh Energy Regulatory Commission said in an order of 2022 that the system loss of gas will not be more than 2 percent under any circumstances. It must be brought down below this. There is no system loss of more than 2 percent anywhere in the world. But so far, gas stolen through various loopholes is being continued as system loss.

Petrobangla has proposed to increase the price of gas per cubic meter to Tk. 75.72 for new industries and captives, but the price of gas for existing industries has been said to remain at Tk. 30 (per cubic meter). Considering the LNG import price of the last 3 months, the proposal to increase this price has been submitted to the Bangladesh Energy Regulatory Commission (BERC).

The rule is that BERC will scrutinize and select the proposal after receiving it. If it is found reasonable, an evaluation committee (BERC team) will be formed subject to approval in the commission meeting. After receiving the report of the evaluation committee, BERC will issue an order after holding a public hearing.

Petrobangla said in its proposal that the gradual decrease in the amount of gas supply has had the greatest impact on industrial and captive electricity. About 75 percent of the gas supplied is available from domestic gas fields, while the remaining 25 percent is being imported from LNG. In the future, domestic gas production may gradually decrease and LNG imports will increase. This will reach 75 percent in the 2030-31 fiscal year.

The current import price of LNG per cubic meter is Tk. 65.70. As a result, the gas price gap will have to be reduced to sustain this sector. As domestic production has decreased over time and high-priced LNG imports to meet gas demand have increased over time, a total of 44 cargoes of LNG have been imported, including 32 under long-term contracts and 12 from the sport market, until December 31 (2024) of the 2024-25 fiscal year.

If a total of 101 cargoes are imported in the current fiscal year, including 28 more under long-term contracts and 29 from the spot market, the estimated deficit will be Tk. 16 thousand 161 crore 71 lakh. If 115 cargoes are imported in 2025, there will be a deficit of about Tk. 22 thousand 315 crore. To reduce the deficit, the price can be determined for promised and potential new gas connections and load increase in the industrial and captive categories.

Petrobangla said in its proposal that the average price of LNG brought from the long-term spot market in the previous 3 months (July-September) has been Tk. 75.72. It was Tk. 64.25 in July, Tk. 65.74 in August and Tk. 61.08 in September, the average price for the three months stands at Tk. 63.58, with VAT, tax and other charges of Tk. 9.88, bringing the price to Tk. 75.72.

Petrobangla wrote that the permitted load in 8 consumer categories in the country is 5,356 million cubic feet (daily). Against this, the demand is 3,800 to 4,000 million cubic feet. Against the demand, 2,800 million cubic feet of gas is being supplied daily, and the deficit remains around 1,200 million. In the fiscal year 2023-24, an average of 2,493 million cubic feet.

If the price in the international market increases, the price will increase, and if it decreases, it will decrease. Two types of rates have been proposed. One rate for approved (promised) but unconnected customers, and a different rate for new industries. Half of the gas rate for promised customers will be equal to the existing rate, and the other half will be the import price. Currently, the rate for each cubic meter of gas used in industry is Tk. 30, and for captives Tk. 31.75. Accordingly, even if the existing industry gets gas at Tk. 30, a new industry of the same type will have to buy gas at Tk. 75.72.

On the other hand, gas is purchased from the state-owned Sylhet Gas Field Company Limited at Tk. 1, from Bangladesh Gas Field Company at Tk.1.25, and from Bapex at Tk. 4 per cubic meter. Then, the average rate for gas purchased from multinational companies Chevron Bangladesh and Tallo stands at Tk. 6.07 per cubic meter. These domestic sources are producing approximately 2000 million cubic feet of gas daily.

The new formula will create unequal competition in the industry, with the existing industry getting gas at a lower price, while new industries will not be able to compete by buying gas at a higher price. Business leaders believe that this may discourage new industries.

Petrobangla has proposed to increase the price of gas used in industries and captive power. Bangladesh Energy Regulatory Commission (BERC) Chairman Jalal Ahmed confirmed to Barta24.com that he received Petrobangla's proposal regarding the increase in gas prices.

He told Barta24.com that he received Petrobangla's proposal in the afternoon. I have down-marked the proposal and given it to the member gas. We will sit on this proposal tomorrow (January 7).

In response to a question about what Petrobangla wanted in its proposal, the BERC Chairman said, "I did not have time to look into the matter in detail. I have only marked it down."

The source said that instead of fixing the price for new connections, it has been said to set the price equal to the cost of imported LNG. Even if you want to increase the load in old industries, you will have to calculate double the price (LNG import price).

If the price in the international market increases, the price will increase, and if it decreases, it will decrease. Two types of rates have been proposed. One rate for approved (promised) but unconnected customers, and a different rate for new industries. Half of the gas price for promised customers will be the same as the existing rate, and the import price for half. Currently, the price of gas used in industries is being charged at Tk. 30 per cubic meter, and Tk. 30.75 for captives.

Bangladesh has been importing LNG under long-term contracts (G2G) and from the spot market (through open tenders). Strict confidentiality is maintained in the G2G contract, which is why the price is not disclosed. However, last August, the price per cubic meter under the spot market contract was Tk. 71.

If the proposed formula is approved, the promised customer may pay about Tk. 60 per cubic meter for half of the gas he uses. The existing rate for half will be paid at Tk. 30. In the case of new connections, the full bill will be Tk. 60.

The Division of Energy and Mineral Resources gave in-principle approval to the proposal to increase the gas price in a meeting on December 27. It states that in case of potential new gas connections in the industrial and captive categories, customers will pay the total cost of LNG import. In case of promised (initial consent letter/letter of acceptance issued) gas connections in the industrial and captive categories, customers will be entitled to up to 50 percent of the existing industrial/captive power category price. In case of excess consumption, they will pay the total cost of LNG import.

At the same time, it has been said that in case of excess consumption of existing industrial and captive categories, customers will pay the total cost of LNG import.

It has been stated that LNG import price will mean the average price of the total cost of LNG purchase (LNG purchase price, regasification charge, VAT, tax and various margins) under the long-term contract and for the previous 3 months of the bill submitted.

In light of that decision of the Energy and Mineral Resources Division, it will be sent to the Bangladesh Energy Regulatory Commission (BERC). For this, existing customers of the industrial and captive category have been asked to send monthly statements of gas consumption in excess of the permitted load (from July 2023 to October 2024).

It is learnt that the letter signed by Petrobangla General Manager (Accounts) Abdul Jalil has been sent to the Managing Directors of 6 distribution companies. The letter states that in order to send the said proposal (proposal to re-fix gas tariff) to the Bangladesh Energy Regulatory Commission, information regarding the amount of gas consumption in excess of the permitted load by existing customers of the industrial and captive category is required. A table has been attached to the letter and information has been asked to be provided accordingly.

Petrobangla sources said that gas is purchased from the state-owned Sylhet Gas Field Company Limited at a rate of 1 taka, from Bangladesh Gas Field Company at a rate of 1.25 taka, and from Bapex at a rate of 4 taka per cubic foot. After that, the average price of gas purchased from multinational companies Chevron Bangladesh and Tallo stands at 6.07 taka per cubic meter. Gas is available from these domestic sources. Approximately 2000 million cubic feet of gas is available daily. 900 million cubic feet of gas is being supplied from LNG imports. The average price in the 2023-24 fiscal year stood at Tk. 24.38. And the average selling price of gas was Tk. 22.87. This resulted in a loss of Tk. 1.56 per cubic meter for Petrobangla. In the 2023-24 fiscal year, the price of LNG brought from the sports market fell to Tk 65, which has to be purchased for Tk. 71 in August (2024).

The latest executive order on February 25, 2024, increased the price of electricity generation (government and IPP) from Tk. 14 to Tk. 14.75 per cubic meter and captive power from Tk. 30 to Tk. 30.75 per cubic meter. Before that, the price of gas was increased by an average of 82 percent by an executive order in February 2023.