Energy Bangla - CNG to Cost More from This Month

The upward revision of the energy price is on the cards. As a result, the price of CNG is going to be increased in the current month.

Special Assistant to the Chief Adviser in-charge of the ministry of energy, power and mineral resources Dr Mohammed Tamim disclosed this on Wednesday while talking with the energy reporters in the conference room of the Jatiya Press Club.

Prof. Tamim did not spell out the CNG gas price but the energy ministry source said that price of the per cubic meter CNG gas would be Tk 15 in place of the existing Tk 8.50

The Forum for Energy Reporters Bangladesh (FERB) arranged the function, which was chaired by FERB chairman Mollah Amzad Hossain.

The Special Assistant said out of Tk 87,000 crore national budget Tk 14,000 crore was spent to provide energy and fertilizer subsidy and a developing economy cannot bear such huge pressure of subsidy.

"We must come out from the pressure of subsidy, but it should have to be done very carefully considering the overall impact on the national economy", he said.

He also said while revising the energy price, current market situation would also be examined as the kitchen market price of different essentials has already created havoc on the life of fixed income group people.

Pointing to the price hike of crude oil in the international market he said Tk 80 is the cost price of per liter of diesel whereas the government sells it at Tk 40, which created serious negative impact on the financial health of Bangladesh Petroleum Corporation (BPC). "At one time the BPC will lose its oil purchasing capacity if the proper measures to adjust the oil price is not taken", Prof. Tamim observed.

The Special Assistant strongly pleaded for continuing subsidy for the agriculture sector and said subsidizing the agriculture sector is the common phenomenon of the whole world.

He also assured that the upward revision of oil price during the current boro season will not take place. He also said the government is considering different options to ensure subsidy at the farmers level.

In this connection he said transport sector or the transport owners are the main beneficiaries of the oil subsidy.

Pointing to the power situation, Prof. Tamim said that despite the adding of 1000 mw generation during the last one year, consumers would have to face 500-800 mw loadshedding during the current summer season.

He said that availability of power during the current summer would be around 4000 mw as against the peak demand of 4500-4800 mw. He, however, said that the controversy remains about the power peak demand statistics as some quarter says that the peak demand is around 6000 mw.

Prof. Tamim said that the administrative failure to install new power generation plant was the major reason for the power crisis. He said that despite having money and gas the administration could not install necessary power plant during the last five years.

He also said that 1000 mw new power would be added to the national grid by December 2008 and arrangements would be made to facilitate 2000 mw new generation by the year 2011.

Regarding gas crisis, Prof. Tamim said that absence of exploration activities during the last 10 years was the major reason for the current energy crisis. According to him, gas demand is around 1850 million cubic feet (mmcf) but the supply side came down to 1730 mmcf, leaving a shortfall of 100 mmcf.

He also said that planned attempt to import gas from Myanmar could not be implemented because Myanmar authorities have signed agreement with India and China to sell their existing gas. However, a memorandum of understanding (MoU) would be signed with Myanmar to have gas from their future discovery.

He also hoped that award of third round bidding to explore hydrocarbon resources from the off-shore regions would be completed by September. Besides, fund has been placed at the disposal of the national petroleum exploration company-Bapex to conduct exploration in three different areas.

UNB adds: At Present, per-unit (1 cubic metre) cost of CNG is Tk 8.50, which was last fixed in July 1, 2004.

Dr. Tamim said that in last few years, the price of

CNG had not been increased though the price of liquid petroleum went up manifold.

The CNG was first introduced in the country in 1985, beginning with Dhaka, under the state-owned RPGCL when its price was Tk 7.45 per cubic metre. At the time, the price of per-litre octane was about Tk 10. For the following 20 years, the CNG price remained static.

From 1994/95, while the price of liquid petroleum fuel was increasing on the international and domestic markets, the government started encouraging people to convert motor vehicles to CNG system and use the gas as fuel.

In 2000, the use of CNG as motor fuel got momentum with the government having encouraged private sector to get involved in CNG business by installing conversion plant and setting up re-fuelling station.

Because of very cheap price, compared to liquid fuels like diesel, petrol or octane (diesel price Tk 40 per litre, octane Tk 67 per litre), CNG became a very popular fuel for motor vehicles of the middle class.

According to an estimate, CNG costs almost one-fourth of the price of liquid petroleum.

So far, about 130,000 motor vehicles, out of a total of about a million, have been converted to CNG-fuelled vehicles, particularly in Dhaka, Comilla and Chittagong cities where CNG re-fueling stations are available.

"But, apart from these two sectors, there are many sectors getting subsidy that should be withdrawn," he added.

Expressing his frustration regarding the state-owned Bangladesh Petroleum Corporation''s business, he said annually petroleum worth Tk 21,000 crore is imported for the country. In this sector, the government has to incur huge loss due to subsidy.

This year, he mentioned, the government has so far allocated Tk 700 crore for petroleum import and the rest of the money would have to be borrowed from banks.

Dr Tamim, a BUET Petroleum Professor-turned caretaker government functionary, blamed the previous BNP government''s administrative failure for the present power crisis across the country.

Dr Tamim forecast that in the coming irrigation season, the country would face 500-800MW power shortages.

Reaffirming the caretaker government''s plan to complete the 3rd-round gas-block bidding, he said that in the last 10 years, there had been no drilling in the country for gas exploration, excepting one or two in Bibyana gas field.

The CA''s Special Assistant said the government has a plan to finalize the draft coal policy within next few days and there would be a fresh committee to review the proposed coal policy.