Spot LNG purchase by pvt sector gets nod

GBNEWS24DESK//

Prime Minister Sheikh Hasina yesterday instructed the import of liquified natural gas from the spot market by the private sector as the government looks to alleviate the industrial energy crisis that is threatening to derail Bangladesh’s growth momentum.

Earlier in July, Bangladesh paused the spot purchase of LNG due to a steep rise in price in the global market, a move that has affected industrial output as gas supply to factories is rationed.

One such casualty is sugar, whose price is scaling new highs in recent weeks as decreased refining in factories has choked supplies.

A secretary brought this issue to the fore in yesterday’s meeting of secretaries at the Prime Minister’s Office in Hasina’s presence, The Daily Star has learnt from people involved in the closed-door discussion.

Despite strict monitoring and other measures, the commodity prices remain sticky downwards, he told the meeting.

Subsequently, inflation averaged 8.75 percent in the first four months of fiscal 2022-23 — a long way off the target of 5.6 percent set in the budget for the year.

While tax waivers and shifting away from the ad valorem duty model may help, the situation will not suitably improve unless normal gas service to factories is resumed, meeting attendants said quoting the secretary.

Ad valorem duty is a duty levied as a percentage of the value of the services or goods being imported, rather than on their weight or the number of units.

Subsequently, the secretary requested the prime minister to allow LNG imports such that regular gas supply to factories can resume.

In response, Hasina directed the energy ministry to get small LNG cargoes from the spot market as soon as possible.

The representative of the ministry of power, energy and mineral resources then pointed out that huge volumes of greenbacks would be needed as the LNG price remains elevated in the global market.

This week, Asian spot LNG prices hit a seven-week-high, tracking European gas prices on cooler weather forecasts and after Gazprom threatened to further reduce gas flows to Europe, reports Reuters.

“Since the factory owners are willing to pay more for gas, let them buy gas as per their requirement from the private sector,” Hasina said at the meeting.

The laws of the land allow private sector players to import gas, one of the secretaries told the meeting.

Subsequently, the PM gave the green light to LNG import by the private sector.