The New Nation - Internet Edition

Staff Reporter

Making a strong plea for raising prices of oil and gas Chief Advisor's Special Assistant for Power and Energy Ministry Prof. M Tamim yesterday said government subsidy on power and energy would come to some Tk 18,000 crore in the coming fiscal year under the newly announced budget.

He said Tk 16,000 crore of this amount would go to petroleum while Tk 1,000 crore to power and another Tk 1,000 to gas sector, he said and termed it as a drain on the state exchequer.

Dr Tamim was speaking at a seminar on 'Energy Security and Price' organised at the National Press Club by the Energy Reporters Forum, the former BUET professor focused on merits of adjustment of the price of petroleum.

He said the country's annual development programme is worth Tk 26,500 crore, but subsidies for different sectors, including fertilizer, would surpass this size of the development recipe.

He also claimed that only a peanut 10 per cent of the total subsidies would go to the rural poor while the urban reach would grab the lion share of 90 per cent.

In support of the argument for a price increase he pointed out that as per today's international market prices, government's import price of per-litre diesel is about Tk 90 while its selling price is only Tk 40.

"So, if we think about the sustainability of energy sector and energy security, we have to go for price adjustment. Not only oil, but the prices of natural gas and electricity also need to be adjusted (with international prices). Otherwise the country will be in a deep crisis," he told reporters.

"It is only a matter of time when we raise the oil prices, which we also know will have multi-dimensional effects on the economy," Tamim said.

"We are always very particular to pay our bills. But for the first time we could not pay them last month and also will not be able to pay (bills) for the current month," said Jalal Ahmed, chairman of the government-run Petrobangla.

"Now it is a question of existence. If the gas price is not hiked we (Petrobangla) may not sustain our plan to discover more gas fields and will also not be able to pay IOCs bills," Jalal said.

The government increased fuel prices by about 21 per cent in April 2007 when crude oil was trading at $67, Tamim said adding the oil price in the global markets has since nearly doubled.

Justifying the need for price adjustment of natural gas, the CA's special assistant said the government's buying rate from international oil companies (IOCs) is about Tk 130 per unit while power plants and fertilizer companies are getting at a much lower rate.

He said energy security is related to energy price. "If there is no coordination between the two, the energy security can't be ensured."

Energy Secretary Mohammad Mohsin told the function that the country has to go for alternative sources of energy for ensuring its security.

He put the country's coal reserve at about 3 billion tons and coal could be the proper option in this regard.

Power Secretary Dr. M Fouzul Kabir Khan said the government would not arbitrarily raise the electricity tariffs unless it is approved by the Energy Regulatory Commission (ERC).

"We have already told the power entities to go to the ERC with their own proposals to justify those," he told the meet.

Former PDB chairman Quamrul Islam Siddique said that the government should move to coal-sector development to reduce its dependence on gas for power generation for the sake of energy security.