Instead of getting lower oil price benefit in the international market the government had to spend Tk 13500 crore subsidy for only to import LNG from Quatar.
The LNG price for in international spot market was US$ 7.23 per million British thermal unit (mmBtu) in October 2018 which has now came down to US$2.71mmBtu during pandemic.
The total subsidy and incentive outlay for FY 2020-21 was set Tk 56,051 crore of which Tk 28,666 crore is subsidy and Tk 27,385 crore is incentive.
“As the government signed a long term (15 years) LNG import deal with Qatar two years ago at a high price, now it has to spend about Tk 14000 crore subsidy,” a high official of the Finance Ministry told Business Mirror preferring anonymity adding that LNG price came down significantly due to coronavirus pandemic.
Qatar’s state owned RasGas will supply 2.5 million tonnes of LNG every year. The LNG would be supplied at: 12.65 percent of the three-month average price of Brent oil plus $0.50 constant per MMBTU (1 million British thermal units).
Payment has to be made in the US dollar within 15 days of submitting import invoice. If there is a delay of seven days, the rate of interest would be LIBOR plus 4 percent. For further delays it would be LIBOR plus 5 percent.
At present, gas supply stands at about 2,750 MMCFD (million cubic feet of gas per day) against the demand for 3,600 MMCFD. The shortage of gas has affected power generation as well as industries and households.
About 2,500 industrial units are awaiting gas connections, he said.
The demand for gas will stand at 8,000 MMCFD in 2041, according to an estimate of the energy division.