Natural gas price adjustment initiative
Natural gas price adjustment initiative
NATURAL gas has been the major primary energy input in the country for industrial, business and domestic consumers. Since the late 1960s, pipeline gas connections have been extended to domestic users, mainly in the urban areas, with the objective of expanding commercial uses of natural gas. At present, approximately 2 million domestic consumers use natural gas mainly for household cooking. The gas utility companies estimate that approximately 7% of the total population of the country gets the privilege of getting piped gas supply for everyday cooking. The rest 93% use either costlier bottled LPG gas, or kerosene or firewood.
An average family generally uses two LPG bottles (12.5 kg each) a month for cooking, spending nearly Tk. 3,000-3,500 (those who use kerosene or fire wood spend as much or more). On the other hand, a consumer enjoys piped gas supply from utility companies paying Tk. 450 only per month (for unlimited use) for domestic consumption. It is assumed that an average 2-burner piped gas user consumes 88 cubic meter (3107.7 cubic feet) natural gas for domestic cooking, which should cost about Tk. 4,000 (nearly 10 times the present price). Experts also consider that the equivalent amount of gas if supplied from imported LNG source would have cost Tk. 3,750 (assuming 1,000 cubic feet of gas costs $ 15). Clearly, it is not at an economic price that domestic gas is supplied to the consumers.
Domestic gas has a finite reserve (approximately 10-12 trillion cubic feet), and at the present rate of pipe gas consumption (including domestic, industrial and commercial uses), the gas reserve will not last more than 10 more years (unless significant new reserve is added). Despite increased exploration efforts, no major gas resource could be discovered since 1996 in the country. So the fear of rapid depletion of gas resource has raised the alarm for energy sector managers. There has been a demand and supply gap for approximately 500 million cubic feet of gas supply daily. This primary energy input shortage has compelled part of the electric power generation units to either sit idle or to use expensive imported liquid petroleum, while industries suffer from gas supply shortages and fail to attain target productions.
In this connection, Dr. Priyantha Wijayatunga, principal energy specialist at the South Asia department at the ADB, says that “it makes more economic sense for Bangladesh to use its own gas reserves in productive sectors to accelerate economic growth rather than in households.” Media reports say that ADB officials called upon the Bangladesh government to continue its efforts in reforming the energy sector to ensure more efficient operations and better services, including pipe gas uses for domestic consumers.
Media reports further say that the state owned Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) is preparing to send formal proposals to Bangladesh Energy Regulatory Commission (BERC) for rationalising natural gas prices for all types of consumers. Speculations about significant increase per unit gas price and doubling of piped natural gas price for domestic consumers has invited debates in the country. Former Petrobangla chairman Dr. Hossain Mansur said in an interview with Samakal (October 15) that Petrobangla would apply for gas price enhancement to BERC.
Petrobangla obtained approval from the Energy and Mineral Resources Division for forwarding such a proposal. Following necessary legal procedures BERC will fix the new gas price per unit for different categories of consumers in the country. As reported, Petrobangla favours doubling gas price for domestic consumers as the organisation intends to establish parity among the pipe gas users and those who are not connected with the gas networks in the country. Also, Petrobangla feels that the present gas price encourages wasteful use of gas.
In addition, Petrobangla intends to propose gas price increase for other categories of consumers, including captive gas consumers, CNG users, power generation companies, urea fertilizer companies and tea producers.
Major gas price hike will have impacts on utility and commodity prices. Sufferings will be obvious for the fixed income group of people in case of increased cost of gas supply. If the earnings from the increased prices are used by Petrobangla for creating funds for gas sector development and for subsidising imported LP gas and LNG (planned to be imported) prices, it will positively impact on the energy sector development in the country in the long term.
The wrtier is a mining engineer.