Nearly 43 per cent of the subsidy allocated for liquefied natural gas (LNG) import in the budget has already been disbursed within one and a half months of this fiscal year as the fuel price spikes amid global unrest.
Until mid-August, sources have said, the Finance Division had disbursed Tk 47 billion (42.73 per cent of FY27 allocation of Tk 110 billion) in favour of Energy Division-over nine times higher than the amount of Tk 5.0 billion disbursed in same period in the last fiscal year.
However, disbursement of subsidy for the power sector remained almost same during the one-and-a-half-month period of this fiscal year compared to same period in the last fiscal year, sources say.
Government spending in the form of subsidy, for energy and power sectors, soared in the recent months after war broke out in the Middle East in particular as gas-and fuel-oil prices mounted due to supply-chain disruptions.
The spot LNG prices this week reached nearly $22 per MMBtu, almost double the price before the United States and Israel began pounding bomb on Iran blocking key Middle-East routes of LNG transportation and forcing suspension of gas production.
On Wednesday, the cabinet committee on government purchase in a meeting with finance minister Amir Khosru Mahmud Chowdhury in the chair approved a proposal for buying one cargo of LNG from spot market at $23.93 per MMBtu amid severe supply shortage.
Finance Division officials say in the recent months the government gave approval for buying scores of LNG cargoes from the global spot market as supply from long-time contactors dried up.
This procurement involves huge extra spending due to higher prices of the fuel, causing huge burden to the public exchequer.
They say there is no sign that conflicts in the Middle East will end soon and so LNG-and fuel -oil prices continue climbing.
A senior energy division official said for LNG subsidy, the government earmarked some Tk 110 billion in the current budget for the entire fiscal year. Due to LNG-price escalation, the government was forced to disburse Tk 47 billion within one and a half months from the budgetary allocation to import the item for keeping factories and wheels running.
In the fiscal budget for 2025-26, the government kept aside Tk 60 billion as subsidy for the import of liquefied natural gas. However, at the end of the year, the subsidy had multiplied to Tk166 billion.
“The trend shows that this year’s LNG subsidy will surpass significantly last year’s spending for the same,” he said.
Professor M Shamsul Alam, Energy Adviser at the Consumers Association of Bangladesh (CAB), says that, currently, the economy is under immense pressure while the energy security is on its “deathbed”.
“Right now, to survive during a wartime period-or rather, during a crisis period-what the government does to maintain food supply and ensure survival is beyond criticism,” he told The Financial Express.
Regarding energy security, he said the question is what strategies the government can adopt alongside this to reach a sustainable stage. “If this issue is not resolved quickly, we cannot survive depending on LNG. The LNG is not a supportive energy source for long-term energy security in a country like Bangladesh,” said Mr Alam.
He said importing LNG while experiencing stagnation in domestic gas extraction over the past years was a “terrifying and self-destructive move”.
Mr Alam has suggested going for extraction of domestic coal and gas to ensure energy security in the future.
Source: https://thefinancialexpress.com.bd/economy/nearly-43pc-of-annual-lng-subsidy-spent-in-just-15-months
