Dhaka: Titas Gas Transmission and Distribution Company wants to increase gas bills for residential customers without meters as well. The company's Managing Director Shahnewaz Parvez said that this issue is in line with the proposal to increase gas prices for new industries and captives.

He told Barta24.com that residential customers without meters are using a lot more gas. A bill of 55 cubic meters for a single stove and 60 cubic meters for two stoves are being collected. But in some cases, there are records of gas usage of up to 100 cubic meters.

In response to a question, he said that there is a lot of difference between the usage of prepaid meter users and non-metered customers. Customers using prepaid meters are very frugal. Therefore, their usage is much less. In areas where prepaid meters are available, they often go to hotels and restaurants to eat. It is not possible to compare them.

On January 6, Petrobangla proposed to increase the price of gas supplied to new industrial boilers and industrial generators (captive) from Tk. 30 and Tk. 31.75 respectively, while keeping the prices of existing customers unchanged. Legally, Petrobangla's price increase proposal is not eligible to be considered. Only licensees can propose a price increase. Therefore, BERC (Bangladesh Energy Regulatory Commission) has asked the distribution companies to propose price adjustments. In a letter issued on January 7, the distribution companies have been asked to submit a proposal for tariff changes to the commission within 3 working days.

Residential customers without meters are charged a fixed amount of gas. Whether the customer uses it, does not use it, or uses more, he has to pay the fixed bill. BERC last ordered a gas price increase on June 5, 2022. Before that order, a public hearing was held. At that time, the statistics of customers using prepaid meters of the distribution companies showed that on average one stove was using 40 cubic meters and two stoves were using a maximum of 50 cubic meters. Based on the usage statistics of prepaid customers, one stove was reduced from 73.41 cubic meters and two stoves from 77.41 cubic meters to 55 and 60 cubic meters respectively.

10 months after the BERC order, Titas Gas applied to increase the existing one stove from 55 cubic meters (Tk. 990) to 76.65 cubic meters and two stoves from 60 cubic meters (Tk. 1080) to 88.44 cubic meters. And if the quantity increases, the price will naturally increase. Titas said in its application that BERC has determined the amount of cubic meters without any survey or data analysis against approximately 2.5 million customers without meters. This has increased technical losses and Titas, a government-owned for-profit organization, is facing financial losses.

BERC's then member (Gas 2022) Maqbul E-Elahi Chowdhury told Barta24.com, Titas Gas's allegations are not true. I think they should have been below 50 cubic meters. Of the 350,000 prepaid meters they had, less than 45 cubic meters were used on average. This can be understood by looking at the prepaid meter bill information. You don't need to know rocket science for this matter.

BERC has been holding Titas' application for a long time. The commission had formed a committee, but the report of that committee has not yet seen the light of day. BERC is also considering taking up the proposal of unmetered residential customers in the public hearing, a source has confirmed.

On the other hand, distribution companies are embarrassed by the proposal for an unusual price increase. None of them sees the logic of increasing prices by 152 percent for industrial and captive customers. Top officials of several companies, on condition of anonymity, said that Petrobangla is trying to increase prices by putting a gun to our shoulders. Consumers will have to face us in the public hearing. However, we do not agree with this price increase at all. As far as we know, a new price formula has been prepared as per the ministry's request. We are having to propose to increase the price despite our reluctance.

Some companies are trying to use this as an opportunity. It is known that many, including Sundarban Company, are going to propose to increase the distribution charge. An official of Sundarban Gas Company Limited said on condition of anonymity, "Our existing wheeling charge is 24 paisa, which is causing us losses. We can propose to set the distribution charge at 32 or 34 paisa."

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. Then, the average price of gas purchased from multinational companies Chevron Bangladesh and Tallo stands at 6.07 taka per cubic meter.

In Petrobangla's price increase proposal, it was said that the current import price of LNG per cubic meter is Tk. 65.70. Adding VAT, tax and other charges, it stands at Tk. 75.72. As a result, the gas price gap will have to be reduced to sustain this sector. If LNG is imported as planned, Petrobangla will have a deficit of about Tk. 16,161.71 crore in the current fiscal year.

Business leaders and organizations have reacted strongly to this process of increasing gas prices. They have demanded an immediate stop to the process of increasing gas prices. They believe that industrialization will be stopped if the proposal is approved.

BERC has formed a technical committee to scrutinize the proposal to increase the price of Petrobangla gas. After receiving the report of the technical committee as per the rules, an order was given for a public hearing.

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."