Bangladesh has started import of Liquified Natural Gas
(LNG) from middle east in August 2018 due to the faster reduction of domestic
natural gas reserves. To welcome a large amounts of foreign investment or private investment
in the several hundred industrial plots, GoB must depend on the foreign natural
gas sources in consideration of investment to be long-lasting. In addition, more than 56% of the power generated from natural gas.
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| LPG input importing cargo moving towards Mongla Port |
That means, either
government has to import the electricity from the neighboring countries or to
import LNG for producing clean energy for the economy. The major concern is
that GoB provides a subsidy for the importation of LNG though it directly
benefits the power sector, the agricultural sectors through fertilizer
production which in turn benefits indirectly the households and other private
and public sectors. Besides that, due to the recent price adjustment of
Liquified Petroleum Gas (LPG) for 12kg cylinder and GoB initiative to cease the
new pipeline gas connection for any type of users, the customers of LPG are
increasing in demand. Moreover, 90% of LPG (only 10% from local production)
imports from foreign sources by the 23 companies. Recently, GoB changed the retail tariff rate for electricity prices after 27 months while the bulk price for the distributor companies also adjusted for reducing the subsidy burned by BPDB. It is found from the data that GoB should increase the bulk price rather than pushing the retail price only. That bold decision to adjust the bulk price was a good decision by circulating the BERC order. Another information needs to be shared that the GoB should continuously adjust the price of pipeline based natural gas. Since our dependency on the LNG in increasing and projection from Mackinsey report reveals that the Asia growth will increase in the coming decade due to the huge demand and local supply gap in this region. Govt. on the other hand must monitor the price of LPG due to make it lucrative for consumer and reduce pressure on the importation LNG. As per the estimation of fiscal year 2019-20, the petrobangla buy LNG at higher price compared to spot price. This happened to follow the agreement with Qatar and Oman for contact price. It is assumed that based on the present consequences, spot market price for 1MMBtu LNG will be less than the contract price; hence govt. should hurry to settle the price line on the spot price basis. That will greatly benefit the sector to reduce the subsidy related pressure on the balance of payment.
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