Subsidies or price increase, 52 thousand crore deficit in gas-electricity sector!
photo: collect
Process of increasing prices of electricity and gas is going on in full swing. The power division said they will have to pay around Tk. 30,200 crore in subsidies if prices do not rise, and the gas sector said they will lose about Tk. 22,000 crore this year (in 2022) if prices do not rise.
Bangladesh Power Development Board (BPDB) and Petrobangla have submitted proposals to the Bangladesh Energy Regulatory Commission (BERC) to increase gas and electricity prices. BERC has already announced the date of public hearing on the petition for increase in gas price. On the other hand, since the cost of electricity is associated with the price of gas, the regulatory body wants to go for a public hearing on electricity by resolving the issue of gas.
The process of increasing the price of gas and electricity has been widely criticized. Energy experts said the wrong policy has led to increased import dependence, which has led to the need to raise prices. On the other hand, people are frustrated with the demands of consumers, so raising the price of gas and electricity at this time would not be right in any way. Political parties have also demanded not to increase the price of gas and electricity.
In such a situation, at the ECNEC meeting on Tuesday (February 22), the Prime Minister directed to reduce the subsidy on gas and electricity, the Planning Minister told reporters. After such instructions from the Prime Minister, the issue of price of gas and electricity has come to the fore again. Many people think that this time raising the price is just a matter of time. In the past, BERC has refrained from raising prices by instructing them to provide subsidies if they have sometimes offered to do so. This time it may be that the path has already been blocked.
The Power Development Board's proposal submitted to the BERC said that due to the shortage of gas supply, the import of furnace oil had to be increased. Expenses have risen by 34 per cent since the withdrawal of duty-exemptions on furnace oil imports last June. In the last financial year, the expenditure on fuel alone has increased by Tk. 8,180 crore. In the fiscal year 2020-21, the cost of generating electricity per unit (kilowatt) was Tk. 3.17. In the previous financial year 2019-20, this expenditure was Tk. 2.13 per unit. Meanwhile, five per cent VAT was imposed on coal last July. Coal prices are also rising in the international market. Due to increase in prices of all types of fuels and further reduction in gas supply, in the current 2022, the cost of fuel for power generation will increase by Tk. 4.24 per unit. The total cost of fuel will increase by Tk.12 thousand 869 crore. Compared to 2021, it will be more than one third. However, if the recent initiative to increase gas prices is implemented, the cost of electricity will increase further.
In February 2020, BERC fixed the average wholesale price of electricity at Tk. 5.16. However, the average wholesale selling price fell to Tk. 5.12 in the last financial year. In that year, the PDB collected a total of Tk.39,052 crore. At the same time, Tk.50 thousand 316 crore has been spent on buying electricity. The loss is 11 thousand 284 crore. Of this, the government has given a subsidy of Tk. 10,352 crore for 11 months (July 2020-May 2021). The remaining subsidy is still pending. If the price of electricity is not increased in the current 2022, there will be a deficit of Tk. 30,200 crore. The proposal to increase the price of gas has been submitted to BERC, if the price increases, the loss will increase further. Therefore, BPDB has requested to increase the price of wholesale electricity by 69 percent to handle the losses.
On the other hand, General Manager (Accounts) of Petrobangla Nazrul Islam told Barta24.com that the price of LNG (liquefied natural gas) in the international market has increased several times. That is why it is currently being sold at a loss. If the price of gas is not increased, a subsidy of around Tk. 22,000 crore will have to be paid this year. Considering the current price, if the price goes up further in the international market then the loss will increase further.
According to sources in the energy division, the government has a subsidy of Tk. 4,000 crore in the energy sector. Of this, the finance ministry has given Tk. 2,000 crore to the energy division. The government now needs Tk. 1,600 crore to import liquefied natural gas (LNG). Last November, the energy division sent a letter to the finance division asking for a subsidy of Tk. 9,331 crore. Then the finance division made it clear that it was not possible to increase the subsidy.
Petrobangla's letter to BERC states that the average purchase price of gas from state-owned companies Bapex and Sylhet Gas Field is Tk. 1.26 per cubic meter, from multinational Chevron Tk. 2.89 and from Tallo Tk. 3.10. On the other hand, the actual purchase price of LNG is Tk. 36.89 and with other charges it is Tk. 50.38. Meanwhile, a meeting of the Cabinet Committee on Procurement (February 23) approved the import of 3.36 million MMBTU LNG at a price of 29.70 dollar per MMBTU. It will cost Tk. 1 thousand 4 crore 69 lakh 8 thousand.
Energy expert Professor Dr. Shamsul Alam told Barta24.com that efforts are being made to fool the people. It is believable that the price of the whole gas has to be increased by 117 percent as the price of 5-6 percent in the system has increased! They are showing calculations with the wrong system, these calculations are not realistic. We are in favor of not importing that amount of LNG if necessary. However, the price should not be increased. After the rise in fuel prices, the people's sufferings have increased manifold. In this situation, increase in gas and electricity prices cannot be desirable in any way.
