Bangladesh Petroleum Exploration and Production Company (Bapex) is sitting idle even after the verdict in the Chhatak gas field case. Bapex Managing Director Md. Shoaib has said that work on the gas field will start after receiving the price award.

He told Barta24.com that working until the price award is received may create legal complications. Our lawyer has advised that, so no work can be done there for now.

Bapex sources said that they have confirmed that they will receive the award-related order from the International Court of Arbitration for Settlement of Investment Disputes (ICESID) in London within the first half of this January.

Petrobangla Director (Planning) Abdul Mannan Patwary also spoke in the tone of Bapex MD. He also told Barta24.com that it would not be right to do any work on it until the final verdict is received.

The Chhatak gas field was discovered in 1959. The following year, the first well was drilled in the gas field and nine gas layers were discovered between 1,090 meters and 1,775 meters. Gas was extracted from there and supplied to the Chhatak Cement and Paper Mill. 26.46 billion cubic feet of gas was extracted, but at one point, the well was closed when water started coming in.

After being closed for a while, on February 27, 2003, an agreement was signed with the Canadian company Niko to develop the gas field. Two serious explosions occurred on January 7 and June 24, 2005, during the drilling of an exploration well in the gas field. This caused extensive damage and loss due to the burning of a layer of gas.

Petrobangla filed a case against Niko in the explosion. The High Court ordered the confiscation of all Niko's assets in Bangladesh and the cancellation of the executed contract. Then Niko went to the Supreme Court, where the verdict was also in favor of Bangladesh.

Niko went to the International Court of Arbitration (ICSID) in the Supreme Court. They filed an arbitration case seeking a declaration that they were not responsible for the gas field explosion. On the other hand, in 2016, Bapex conducted a study through a committee of international experts. In this, Bapex sued Niko for 118 million dollars and the Bangladesh government for 896 million dollars in compensation. The Niko Tribunal issued a historic verdict on February 28, 2020, accusing Niko of violating the terms of the joint venture agreement for the explosion.

The tribunal ordered Bapex to compensate Niko for all damages directly arising from the incident, accusing Niko of the incident. At the same time, the tribunal ordered Bapex to compensate Niko for the gas released from the Chhatak gas field in the incident. The tribunal was instructed to raise the amount of other damages, including environmental damages, to Exide. An order regarding that damage (price award) could come any day.

Although this potential gas field is fractured, it is divided into Chhatak East and Chhatak West (Tengratila). A large amount of gas in Chhatak West was burned in the fire, other layers and Chhatak East reserves exist. The potential reserves are considered to be 2 to 5 TCF (trillion cubic feet). If gas is found there, it is possible to supply it quickly.

Former Managing Director of Bapex Amjad Hossain told Barta24.com, assuming that there may be legal complications when going to work in the auction field. But where is the obstacle in preparing the DPP (Development Project Proposal). It takes 6 months to 1 year for paperwork; there should be no obstacle in moving that work forward. In fact, no one wants to work responsibly. During this great gas crisis, the gas field should not be left like this. Work should be started on the field quickly.

The reserves of domestic gas fields are running out, which is constantly reducing production. At one time, 2800 million cubic feet of gas was available from domestic gas fields daily, but now it has come down to 1932 million cubic feet. To increase supply, LNG is being imported through two FSRUs.

Petrobangla said that the permitted load in the country for 8 consumer categories is 5,356 million cubic feet (daily). Against this, the demand is 3800 to 4000 million cubic feet. Against the demand, 2800 million cubic feet of gas is being supplied daily, and the deficit remains around 1200 million. An average of 2,493 million cubic feet in the 2023-24 fiscal year.

An ordinance has been issued to increase the value-added tax (VAT) and supplementary duty on hundreds of goods and services, including hotels, restaurants, telephones, internet and soft drinks.

This information was revealed in an ordinance signed by President Md. Shahabuddin on Thursday (January 9).

The two ordinances issued on Thursday night are the Value Added Tax and Supplementary Duty (Amendment) Ordinance 2025 and the Excise and Salt (Amendment) Ordinance 2025. After the promulgation of these two ordinances, the VAT Department of the National Board of Revenue (NBR) issued instructions in this regard. As a result, the changes in this ordinance came into effect immediately.

The National Board of Revenue planned to increase and rationalize VAT on some goods and services to comply with the conditions of the International Monetary Fund (IMF). The report submitted by the NBR was presented at the meeting of advisers, which was approved.

Costs that will increase due to the increase in duties and taxes

Until now, a supplementary duty of 20 percent was imposed on the use of mobile phone SIM or RIM cards. This has now been increased to 23 percent. As a result, the cost of talking on mobile phones and using the internet will also increase. VAT on bills of brand shops and ready-made clothing outlets in shopping malls has been increased from 7.5 percent to 15 percent. In addition, VAT on all types of restaurants has been increased from 5 percent to 15 percent.

The list of duty-tax hikes also includes tissues, cigarettes, nuts, mangoes, oranges, grapes, apples and pears, fruit juices, any type of fresh fruit, paints, detergents, dyes, liquor bills, potato flakes, plastic and metal frames of glasses, reading glasses, sunglasses, electrical transformers and the oil used in them, electricity poles, CR coils, GI wires, etc. Apart from this, travel tax has also been increased. 

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.