Rejaul Karim Byron
Subsidy expenditure is set to increase 80.26 percent to Tk 37,804 crore in fiscal 2018-19 as the government looks to bankroll lower gas and fuel prices keeping an eye on the national election due to be held at the end of this year.
The government is planning to subsidise gas price for the first time next fiscal year as it is importing liquefied natural gas at a rate much higher than that of the locally produced gas.
The first consignment of imported LNG has arrived and will be added to the national grid in a couple of weeks' time. As soon as it is blended with local gas, the price will shoot up.
“But, it will be lower than the purchasing cost of LNG,” said energy ministry officials.
The per unit cost of imported LNG is Tk 25.17; after adding tax and regasification charges the total cost comes to Tk 33.44, according to Petrobangla.
The cost of production for per unit of gas would be Tk 14.64 when LNG and local gas are blended. The average retail price of gas supplied by Petrobangla from domestic sources is Tk 7.39 per cubic metre.
Subsequently, various companies of Petrobangla have proposed that the Energy Regulatory Commission should increase the gas price from Tk 7 to Tk 40 in various sectors like power, fertiliser and CNG auto rickshaws.
“Even after the price hike there will be losses because of imported LNG. So, we have sought subsidy from the finance ministry,” the energy ministry officials added.
The finance ministry has kept aside Tk 5,500 crore for subsidising gas price, up from Tk 2,500 crore in the outgoing year, said finance ministry officials.
Meanwhile, after a few years of historically low prices, fuel price has started to increase on the global market, meaning the need for fuel subsidy has emerged once again.
Next fiscal year, Tk 5,000 crore is being kept in the 'other heads' column if the Bangladesh Petroleum Corporation's losses continue.
The energy and mineral resources division has proposed either subsiding the petroleum products or hike their prices. But the government has opposed to the idea of increasing the fuel prices in a time when the national election is so close.
BPC's profit plummeted 45 percent in the first 10 months of the fiscal year to Tk 3,995 crore due to the government's resistance to adjusting the domestic prices with that of the global market.
Petroleum prices dropped drastically on the global market in 2014 and remained almost steady for the next three years. BPC had incurred losses from fiscal 2009-10 through to fiscal 2013-14 and in the following three years made huge profits.
Since November last year BPC has been incurring losses and now it has stood at Tk 34 crore a day, said a BPC official. “If it continues this way, we may not be able to log in any profit for this fiscal year,” he added.
The government had given the state-run agency Tk 800 crore in fiscal 2015-16, but later the fund was withdrawn as it was not required. Since then BPC has not required any subsidy.
The subsidy in the power sector has been kept at Tk 9,200 crore in fiscal 2018-19, up from Tk 6,000 crore in the outgoing year.
Subsidies to the agriculture sector has been raised to Tk 9,000 crore from Tk 6,000 crore, while export and jute goods subsidy has been kept the same at Tk 4,500 crore. In the next fiscal year, food subsidy will be Tk 4,606 crore, which was Tk 2,729 crore this fiscal year.
- Courtesy — The Daily Star/ June 21, 2018