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BGFCL wants its gas sales tariff doubled

Sharier Khan
The country's biggest natural gas provider Bangladesh Gas Field Company Ltd (BGFCL) is asking the government to increase its gas sales tariff to Tk 14 per thousand cubic feet (mcf) from the miserly rate ofTk 7 for the last 17 years.
While the BGFCL is investing huge money to increase gas production by 270 million cubic feet per day (mmcfd) in the next four years to reduce energy crisis in the country, the company is losing money through gas sales due to the .low tariff.
For the last five years, the BGFCL has been steadily contributing to the national exchequer more than Tk 1.500 crore a year as supplementary duty, Vat and debt service liability.
Ironically, the same company
has been compelled to turn to the Asian Development Bank (ADB) for a $100 million loan to undertake projects to increase gas production and maintain Titas gas field. Side by side, the company is spending around Tk 500 crore from its own funds for various projects to increase gas production.
"Our breakeven cost isTk 14 per mcf," says a top BGFCL official. "If we can get just price for our gas, we don't need to borrow from donors to undertake development projects."
The Tk 7 well-head gas sales tariff was fixed in 1991. The same gas is transmitted by Gas Transmission company Ltd (GTCL) that is paid Tk 11 per mcf. At consumer end, average sales rate is Tk 93 per mcf.
Increase of BGFCL's tariff will not affect retail gas tariff at con-
sumer's end or its annual contribution to the national exchequer.
Seconding this argument, Petrobangla in May sent a proposal to the government to increase gas sales tariff of the BGFCL and Bapex. The government last month raised gas tariff of Bapex from Tk 7 per mcf to Tk 25. Bapex produces a small amount of gas and made no profit from its sales. So, it needed a major price adjustment. The BGFCL needs a small adjustment, sources said.
"The company now provides 700 mmcfd gas from different gas fields it owns. Of these, Titas field supplies around 400 mjncfd as the main provider," said a Petrobangla source. The BGFCL owns Titas, Bakhrabad, Rashidpur, Narsinghdi and Kailastila gas fields.
The gas company contributed to the national exchequer Tk 1,332 crore in fiscal 2002 '03, Tk 1,551 crore in '03-'04, Tk 1,566 crore in 04-'05, Tk 1,566 crore in '05-'06 and Tk 1,587 crore in '06-‘07. Its contribution in 07-08 would also be close to Tk 1,600 crore, sources said.
But the company gets only 10 percent of its total earning. "Given the nature of the company, an annual net earning of Tk 150 crore might not be a big deal. Sometimes, development work might need huge investment, forcing the BGFCLto resort to donors," notes a source in Petrobangla, mother organisation of the BGFCL.
After spending a lot of its funds to stop alarming gas leakage from Titas field, the BGFCL is set to spend around Tk 427 crore from its own funds to drill a new well (No-9) and conduct workover of two wells (2 and 5) in Bakhrabad field, drill two new wells in Titas field (17 and 18) and install gas processing plant. It is spending Tk 19 crore for workover of a well in Meghna.
These work will add 120 mmefd gas to the national grid. Of this, 30 mmefd will be transmitted to the national grid from December.This will gradually rise to 150 mmefd by 2010.
But side by side, the BGFCL is seeking a $100 million loan from the ADB to completely end the gas leakage from Titas field and to drill four wells there. This will increase gas production by another 120 mmefd from 2012.
This means BGFCL’s total output will go up to 970 mmefd by 2012.
In addition, the company is jointly developing Begumganj gas field with Bapex and Sylhet gas field with an initial investment ofTk 187 crore. Of this, the BGFCL has committed to pump in around Tk 90 crore.
"This gas company has given so much to the nation, it is time the
nation helps this company grow further," commented a Petrobangla high official.
TITAS FIELD WOES
According to a conservative estimate, Titas field has lost at least one billion cubic feet of gas through the leakage detected in 2003, but was left alone neglected. After a lot of hues and cries by experts, including former Bapex high official Mir Moinul Haque, a project was undertaken.
After a series of events, faulty gas well Number-3 was y?aled at a cost of $10 million several months back.
"But you can still see gas leakage, there are gas bubbles in the Titas river. This time however the emitted gas is nothing but gas that remained charged underground due to the past leakage. Perhaps there are some other undetected problems with the field. We are monitoring all the wells and data shows no anomaly in the producing wells," said a BGFCL official. "1 should say the field's condition is not as dangerous as it had been."
He wet on, "We believe the three dimensional survey now being undertaken will reveal whatever faults this fiefd has developed. We can take remedial actions after that. Otherwise, it is impossible to address this leakage problem.'
Titas field is considered as the lifeline of Bangladesh's energy. Initially assessed to have five trillion cubic feet (tef) of gas, the field has already produced 3 tef from the sixties.
Judging from the gas pressure trend, which remains the same as in the sixties, Petrobangla experts believe this field still has four to five tef of gas.
"There are still parts of this gas field which have not been tapped. For instance, the field extends to the Saida river. There have been no drilling on that side. We are considering drilling of six wells on that side," said the BGFCL official.