Bangladesh Cuts Duty to Keep LNG Lower

Bangladesh has waived 5.0% customs duty (CD) on LNG to keep the domestic natural gas prices lower, a top official of the National Board of Revenue (NBR) told NGW October 3. He said the NBR had issued a statutory regulatory order (SRO) with effect from September 18.

With long-term LNG prices contractually linked to the price of Dated Brent, imports will become even more expensive in the coming months.

Withdrawal of 93.25% supplementary duty (SD) on locally-produced gas and imported re-gasified LNG is also underway, he said. But there would be 15% value added tax, or VAT, on the blended gas, the NBR official added. Bangladesh has been blending the far greater volumes of its  cheaper, locally produced gas with imported re-gasified LNG as it has no dedicated consumer for re-gasified imported LNG.

Gas supplies are hovering around 3.042bn ft³/d, of which locally produced gas is around 2.729bn ft³, according to statistics of Petrobangla as of October 2, 2018.

Bangladesh’s energy regulator will wait until another SRO waives SD on blended gas before announcing a fresh hike in domestic natural gas tariffs, the Bangladesh Energy Regulatory Commission (Berc) said.

The decision to waive SD and CD were made earlier following a series of discussions with top officials of the prime minister's office (PMO), the ministry of power, energy and mineral resources (MPEMR), National Board of Revenue, (NBR) and Petrobangla.

State-run Petrobangla, however, has been enjoying a reduced advance income tax of 2.0%, down from the usual 5.0%, on LNG imports since Excelerate Energy’s FSRU Excellence delivered its first LNG April 24, Petrobangla director finance Md Towhid Hasanat Khan told NGW October 3. “With the current tariff structure the weighted average price of natural gas of Petrobangla stands at around Taka 9.30/m³,” Khan said, but Petrobangla sells gas about Taka 2/m³ less than that on average.

Excelerate has been charging Petrobangla fees worth $232,000 daily since the commissioning of its vessel at Moheshkhali on August 18, no matter the quantity of LNG it regasifies, Petrobangla chairman Abul Mansur Md Faizullah said.

Gas consumers in Chattogram – formerly Chittagong – now receiving around 313mn ft³/d, said managing director state-run Karnaphuli Gas Distribution Company Khaiz Ahmed Mozumder.