The Finance Ministry has given its consent to provide Tk2,000 crore to Petrobangla from Gas Development Fund (GDF) to import liquefied natural gas (LNG).
An official order reveals that as per the proposal of the Energy and Mineral Resources Division, the Finance Ministry agreed to provide the fund as a loan to the state-owned Petrobangla.
The approval from the Finance Ministry came against the backdrop of the severe fund crisis Petrobangla has been facing following the excessive price hike of gas in the international market as a fallout of the Russia-Ukraine war.
The price of LNG has crossed $39 per MMBtu from below $10 after the Russia-Ukraine war began on February 24 this year.
About the Finance Ministry’s approval, Consumers Association of Bangladesh (CAB) Vice President M Shamsul Alam said this is an indication that the government is in a serious crisis in dealing with the energy sector.
Recently the Energy Division announced its decision not to import any LNG from the international spot market because of the price hike.
As a result, it has to go for reducing power generation from gas-fired plants forcing the power entities to resort to planned load shedding.
However, it continued importing LNG from Oman and Qatar under long term contracts where the price is fixed but varies to some extent on different conditions.
Now, it’s not clear whether Petrobangla will use the new fund to resume import of LNG from the spot market or utilize it to import gas from long-term suppliers.
GDF was created by the order of the Bangladesh Energy Regulatory Commission (BERC) a few years back to allow the Pertrobangla to receive additional money with gas bills from the consumers to use the fund for gas exploration in the country.
The BERC also created some other funds from the consumers’ additional money and the regulator is highly against the use of such funds for any other purpose than gas sector development.
But all operation of such funds was taken up by the Energy Division. Meanwhile, Petrobangla used some of the funds for different other purposes while deposited to the government exchequer as per a Finance Ministry order.
As per the current arrangement, if the Energy Division or Petrobangla wants to use the fund for any purpose, it has to take permission from the Finance Division. The BERC is against the operation and control of the Energy Division on such funds.
The BERC in June directed state-owned Petrobangla to return a total of Tk12,227.44 crore to its two original funds—the energy security fund (ESF) and the GDF.
The energy regulator’s latest directive which came as the BERC Order No-2022/7, in detail, was released on June 27 and uploaded on its website on the same day.
As per the BERC verdict, Petrobangla has to return Tk9227.44 crore to ESF Fund and Tk3,000 crore with interest to the GDF fund which the organization had taken away and used for different purposes.
The verdict did not dictate a specific date for Petrobangla as to when it has to return the funds.
The order came as a follow-up of the public hearing on gas prices held on March 21 in the city’s BIAM Auditorium where different consumer rights groups, including CAB, termed the ESF and GDF fund as consumers’ money which they paid in addition to their bills for gas field development and security purposes.
The CAB and other rights groups pleaded with the BERC to return the amount to the original funds and ensure its use only for gas field development and the gas sector’s security purpose in a transparent way that will be monitored by consumers’ representatives.