Ministry of Power, Energy and Mineral Resources has given in-principle approval to double the gas prices for new industrial and captive connections, with charges pegged to the fluctuating costs of imported LNG rather than a fixed rate.
Existing industrial units that increase their load will also face the doubled rate.
Energy and Mineral Resources Division's proposal outlines two pricing structures: One for customers with approved but inactive connections, and another for new industrial users.
For the former, half of the gas consumed will be charged at the current rate of Tk30 per cubic metre, while the other half will reflect the import costs.
Currently, the rate for gas used in industries is Tk30 per cubic metre, with captive units at Tk30.75 per cubic metre.
Bangladesh imports LNG through long-term government-to-government contracts and spot market tenders.
While the terms of G-to-G agreements are confidential, recent spot market contracts priced LNG at Tk71 per cubic metre in August.
Under the proposed formula, customers with approved connections could see an average price of approximately Tk60 per cubic metre for half their consumption, while new connections would be fully charged at this rate.
The policy was given preliminary approval at a meeting on 27 December, stipulating that customers in the industrial and captive sectors will pay the total cost of imported LNG for potential new connections.
For approved but inactive connections, half the gas will be priced at the existing industrial rate, and the other half at the full import cost.
Existing customers exceeding their sanctioned load will also pay the full import price.
The proposed price of LNG will be calculated based on the average cost over the previous three months, including purchase price, regasification charges, VAT, taxes, and various margins.
This formula is to be submitted to the Bangladesh Energy Regulatory Commission (BERC) for final approval.
Petrobangla General Manager (Accounts) Abdul Jalil confirmed sending letters to six distribution companies seeking monthly usage details from July 2023 to October 2024 to submit to BERC.
The letter, signed by Jalil, stated that detailed information on excess usage beyond the sanctioned load is necessary for the tariff adjustment proposal.
Petrobangla sources disclosed that gas from local sources such as Sylhet Gas Fields and Bangladesh Gas Fields is purchased at rates ranging from Tk1 to Tk4 per cubic metre, blending to an average price of Tk6.07 per cubic metre.
Daily domestic gas production is about 2,000 million cubic feet, supplemented by 900 million cubic feet of imported LNG.
In the 2023-24 fiscal year, the average import cost of LNG was Tk24.38 per cubic metre, with a selling price of Tk22.87 per cubic metre, resulting in a loss of Tk1.56 per cubic metre.
In February 2024, the government increased gas prices for electricity production from Tk14 to Tk14.75 per cubic metre and for captive power from Tk30 to Tk30.75 per cubic metre.
Previously, in February 2023, gas prices had risen by 82% under executive orders.
The new policy, replacing the prior executive orders, now delegates the power to set gas and electricity prices to BERC, as confirmed by Energy and Mineral Resources Advisor Fouzul Kabir Khan.
Business leaders have raised concerns that the new pricing formula could create an uneven playing field, discouraging new industries due to higher costs compared to established ones.
