Gas supply to increase | The Daily Star
12:00 AM, February 13, 2018 / LAST MODIFIED: 04:08 AM, February 13, 2018

Gas supply to increase

Substantial rise in price likely

The country's gas supply is likely to increase by 500 million cubic feet per day (mmcfd) from this April with an apprehension that there might be a substantial rise in its price for consumers as well.

Currently, the country's gas supply is about 2,550 mmcfd against a demand for over 3,000 mmcfd.

The 500 mmcfd gas will be imported from Qatar and some other countries as Bangladesh's first FSRU (floating storage and regasification unit).

A second FSRU is set to be commissioned in October to double the supply of imported LNG (liquefied natural gas) to 1,000 mmcfd, official sources at the Energy Division and state-owned Petrobangla said.

The incumbent estimated average gas supply cost per cubic is Tk 7.21 per cubic metre. Once the very costly imported LNG is blended with the local gas, the supply cost will go up to Tk 18-19 per cubic metre, even if it enjoys a tax waiver to LNG import, said a top official at Petrobangla.

"So, it will be indispensable to adjust the price at the consumer level," said Md Quamruzzaman, managing director of the Rupantarita Prakritik Gas Company Ltd (RPGCL).

The state-owned RPGCL, which is responsible to import LNG and supply it to the national grid, has so far taken a huge number of projects.

Among its projects, installation of the very first FSRU of 500 mmcfd LNG regasification capacity at Moheshkhali Island is now nearing completion and is scheduled to be commissioned in April as per the deal signed with its operator US-based Excelarate Energy.

The second FSRU is being set up by Summit Group in the same area with a schedule to start operation in October this year. Its regasification capacity is also 500 mmcfd.

Quamruzzaman said RPGCL is very hopeful of timely commissioning of the two FSRUs to increase the supply by 1,000 mmcfd by the year-end.

He said the government has already signed a contract with Qatar's RasGas to get 60 percent of the first phase import of 500 mmcfd LNG while the remaining 40 percent will come from international LNG spot market through quotation.

Besides, the final deals are being ready for signing with another three companies-Pertaminaof Indonesia, OTI of Oman, and AOT of Switzerland, in order to import another 3.25 million tonnes of LNG annually to regasify at the second FSRU to increase the supply by another 500 mmcfd.

"We hope, we will be able to sign the final deals with the last three companies within the first half of the current year," he told the news agency.

Officials said the imported gas will cost over $9 per mmcfd while the local gas costs about $3 per mmcfd.

The government already decided to give a tax waiver for gas import to keep the cost low from the calculated cost with tax.

An Energy Division official said Petrobangla is examining the matter to determine the exact gas cost after the LNG import.

Being directed by the Energy Division, the state-owned gas distribution companies like Titas, Jalalabad and Bakhrabad have already submitted their proposals to Bangladesh Energy Regulatory Commission (BERC) to raise the gas price.

But a top official at the BERC said the regulator is yet to respond to their proposals. "Possibly, BERC might take steps to adjust gas price after the start of LNG import to see its impact on local price," he said preferring anonymity.

Finance Minister AMA Muhith and State Minister for Energy Nasrul Hamid on various occasions also dropped broad hints that the government would require to raise gas price after the start of LNG import.

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