CNG price may go up to Tk 15 by March
Tuesday, 26 February 2008

Staff Correspondent

The government is likely to increase the price of compressed natural gas (CNG) to around Tk 15 per cubic metre from the existing price of Tk 8.5 by March, said sources in the Energy Division.

Chief Adviser Fakhruddin Ahmed has already given the nod to the Energy Division to complete the groundwork for increasing the price of CNG in consultation with the communications ministry, they said.

'We have already informally discussed with the communications ministry our proposal to increase CNG's price to Tk 15, and they have made a positive response.

The division will hold further discussion with the ministry before making the final decision on the price-hike,' said a source. The ministry will have a say in the extent of hiking the price of CNG as the matter of transport fares is intimately associated with it, he said.

He said that after the meeting with the communications ministry, the energy division would place a summary on the proposed price-hike before Fakhruddin with the aim of increasing the price by March.

'Decision-makers in the government have agreed in principle that the price of CNG should be increased as the high-income people, who are getting CNG at almost no cost compared to the price of octane and petrol, are reaping the benefit of the subsidised price of CNG,' said another division source.

The Energy Division and Petrobangla have been trying to increase the price of CNG in the last one year but the interim government has so far not given its approval.

The newly appointed special assistant to the chief adviser for the power and energy ministry, M Tamim, has been trying to get the government's approval to increase the price of CNG, said sources in the division. Tamim said last week that they were planning to increase the price of CNG but had not yet decided when the price would be increased.

'The one thing I can say is that the price of CNG should be increased immediately as Tk 8.5 per cubic metre of CNG is an absurd price as nowhere in the world do people pay such a throw-away price.'

Many officials of the Energy Division feel that the price of CNG should be increased as the prices of petrol and octane have been doubled since the last price-hike of CNG in 2004.

'In 2004, the price of a litre of octane was Tk 35 and petrol Tk 33. But the present prices are Tk 67 and Tk 65 respectively. In terms of value, the price of CNG is almost 5 to 6 times lower than that of petrol and octane,' said an official.

He said that the number of CNG-run vehicles in the country is around 1.3 lakh, of which around 70 per cent are private cars owned by people of the high-income group. 'So ultimately the benefit of the subsidised price of CNG is going to the affluent people,' he said.

Besides, all the CNG-run buses charge fares similar to those of the diesel-run buses, he said. The Energy Division in July last year sent a proposal to the government to increase the price of CNG to Tk 15 per cubic metre along with the proposal to increase price of normal gas at the consumer and domestic level.

'Now we have separated the CNG price and normal gas price issues. After the price of CNG is hiked, we will then try to increase price of gas,' said a division source.

Comments Add New
Johnsion Duru  - General Manager (Projects) - Owel Gas, Nigeria |2009-09-10 17:15:15
Talking about increament in the price of CNG. Care must be taking to ensure the action will not be counter productive. While CNG technology is at developmental stage in most economies, and efforts at it's development are still at the teething stage in most countries including Nigeria to convince consumers on the safety of it's use and the alternativity to PMS, any action that will undermine progress in these direction should be weighed carefully before implementation. There is need to ensure stakeholders alignment. Government should be concern with creating a balance to meet all interet particularily the interest of the masses. While special interest will be driven by profit with little impact on the macro/micro economy, government should be interested in making energy affordable to improve the life of the people and reduce inflation. Affordable energy have great and / or positive impact on GDP. Also environmental impact is a crucial factor to leverage in decision. So, my recommendation is that government should balance all interest in deciding whether to increase in the price of CNG at this time, looking at the big picture.
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