LNG to be cheaper with duty waived

LNG to be cheaper with duty waived

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The cost of imported LNG is likely to be Tk 11.50 per unit (each cubic metre) as the government has finally exempted all kinds of duties on it.

After a huge debate over duty exemption between the National Board of Revenue (NBR) and the Energy Division, the government finally allowed the exemption considering its huge economic benefits, according to official sources.

Confirming the government’s decision, State Minister for Power and Energy Nasrul Hamid said Energy Division received a letter from the National Board of Revenue (NBR) recently.

“We’ve received a confirmation letter from NBR before the passage of the national budget in parliament,” he told UNB.

According to the junior minister, had the duties and taxes not exempted the price of LNG would be Tk 40 per unit.

Mentioning the exemption as a big initiative in energy sector, he said the Power and Energy Ministry has successfully convinced the policymakers about its great benefit.

“Due to duty exemption, the government may lose an amount of Tk 5,000 crore revenue income. But the value of exemption is much greater. Now the government could earn Tk 20,000 crore as benefit of exemption,” he said adding that over 5,000 industries will get gas after the LNG import while the country will get extra 3,000 MW power.

With the decision of the duty exemption concern of different types of gas consumers, especially those of CNG and industrial sectors, will now be removed, the official sources said.

At present, they said, the locally produced natural gas is levied by 120 percent taxes, including 15 percent value added tax (VAT) and its production cost now stands at Tk 9.55 per unit.

Currently, the government is distributing gas to different consumers at different prices. Of this, the price for CNG station is Tk 40 per cubic metre (cm), which is the highest, and the lowest is Tk 3.16 per cm while household consumers are getting gas at Tk 11.20 per cm, commercial consumers at Tk 17.04 per cm and industry at Tk 7.76 per cm.

They said the government recently initialed a contract with Qatar to annually import 182.5 billion cubic feet of LNG with a plan to supply 500 mmcfd gas to the local supply network.

Official sources said Bangladesh is also going to get the benefit of declining fuel price in LNG import.

The LNG price now stands at $6.7 per BTU (British thermal unit) in the global market while about seven years ago when the government signed the memorandum of understanding (MOU) with Qatar the price was $14 per BTU.

Md Quamruzzaman, managing director of the Rupantarita Prakritik Gas Company Limited (RPGCL), a subsidiary of state-owned Petrobangla, said the price of Qatari LNG will be linked to international fuel price.

“Once petroleum fuel price goes up, the LNG price will go up and once fuel price comes down, the LNG price will follow it,” he said adding that the LNG price will always be set under a certain formula agreed by both Qatar and Bangladesh.

RPGCL will import the LNG and supply it through re-gasification.

To facilitate the supply of imported LNG through re-gasification, the government has awarded a contract to Excelerate Energy, a US-based firm, to set up a LNG terminal with FSRU (floating storage and re-gasification unit) facilities.

The LNG terminal is scheduled to start its commercial operation by April next while the import of LNG from Qatar will start from that time.

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