The Titas Gas Transmission and Distribution Company, which is the largest gas distribution utility in Bangladesh, recently presented a proposal to the energy regulator regarding an adjustment in charges for its existing base of over 2.5 million fixed-price subscribers. The company’s investigation revealed that these subscribers have been consuming a higher volume of gas units than their legally allocated quota.
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In order to address this issue, Titas Gas Transmission and Distribution Company has sought approval from the Bangladesh Energy Regulatory Commission (BERC) for the implementation of the proposed adjustments. If approved, the charges for fixed-price subscribers will increase by 39 percent, raising the price from the current Tk 990 to Tk 1,379 for a single burner stove. Similarly, the charges for a double-burner stove will experience a 47 percent increase, escalating from Tk 1,080 to Tk 1,592.
What the BERC authority is thinking about this proposal?
The Chairman of the Bangladesh Energy Regulatory Commission (BERC), Md Nurul Amin, confirmed that the commission has received a proposal from Titas Gas Transmission and Distribution Company regarding a revision of the gas allocation for non-metered residential consumers. He stated that the proposal will be presented during the commission meeting, and a thorough assessment of its validity will be conducted, as reported by The Business Standard.
Currently, Titas Gas serves a total of 2.857 million household consumers in the Dhaka and Mymensingh divisions. Out of this figure, 2.525 million consumers are non-metered, while 332,000 have opted for prepaid meters. For non-metered users, the energy regulatory commission calculates their bills based on a monthly average consumption of 55 units for a single burner and 60 units for a double burner. On the other hand, prepaid customers are billed according to their actual usage at a rate of Tk 18 per cubic meter.
As per the feedback received from prepaid meter users, a family of five can comfortably utilize a Tk 1,080 recharge for approximately one and a half months. Titas Gas has put forth a claim in its proposal that non-metered domestic consumers employ gas not only for cooking but also for water boiling purposes. Furthermore, workers in industrial areas and sublet tenants often consume more gas than an average household due to interim cooking for multiple families.
Based on these observations, Titas Gas has suggested to the regulatory commission that the gas allocation for non-metered domestic users should be revised from 55 cubic meters to 76.65 cubic meters for single burners and from 60 cubic meters to 88.44 cubic meters for double burners. The proposal will undergo evaluation by the Bangladesh Energy Regulatory Commission for a final decision on its implementation.
Gas consumption study prompts Titas Gas to seek price adjustment
The current prices for fixed-price subscribers were established in June of the previous year, taking into account the average gas consumption of households. It was determined that a single-burner stove typically utilizes an average of 55 cubic meters of gas per month, while a double-burner stove consumes approximately 60 cubic meters. Managing Director of Titas Gas Transmission and Distribution Company, Md Haronur Rashid Mullah, informed reporters that their investigation revealed fixed-price subscribers were exceeding their allocated gas quotas.
After conducting extensive surveys and investigations, Titas Gas found that on average, fixed-price subscribers consume 76.65 cubic meters of gas per month with a single-burner stove and 88.44 cubic meters with a double-burner stove. The company has submitted these findings to the regulator, urging them to consider these figures when revising the gas prices.
Additionally, MD Haronur stated that pay-as-you-go subscribers of Titas Gas, on average, do not exceed Tk 600 in monthly payments for gas services. Pay-as-you-go subscribers are charged Tk 18 per unit of gas, a rate established in the previous year during the last adjustment of gas retail prices. MD Haronur argued that pay-as-you-go subscribers are more conscious of their gas usage due to the payment structure, allowing them to monitor and manage their expenses. Conversely, fixed-price subscribers do not pay close attention to their consumption as they fall within a fixed pricing bracket.
Titas Gas is advocating for the Bangladesh Energy Regulatory Commission (BERC) to raise the average gas usage quota based on their investigation findings, enabling them to adjust charges accordingly. However, Haronur expressed a lack of support for increasing the per-unit gas price, emphasising that Titas Gas primarily receives a margin of Tk 0.13 on gas distribution and is not directly involved in price adjustments.
CAB slams Titas Gas’s “outrageous” proposal
Dr. M Shamsul Alam, the energy adviser of the Consumers Association of Bangladesh (CAB), strongly criticised Titas Gas Transmission and Distribution Company’s proposal, describing it as “outrageous.” Dr. Alam argued that Titas Gas’s services are below average and its infrastructure is of poor quality, which undermines the company’s credibility in requesting a price increase.
According to Dr. Alam, Titas Gas’s distribution pipelines have numerous leaks and the overall distribution system is sub-standard. He went so far as to label the distribution system a potential danger, as the company allegedly neglects maintenance in their distribution lines. Dr. Alam expressed shock upon hearing about Titas Gas’s proposal, citing the poor condition of their infrastructure and services.
Furthermore, Dr. Alam accused Titas Gas of being plagued by corruption and irregularities, asserting that the company pays little attention to addressing these issues. Despite these concerns, Titas Gas continues to benefit from a two percent systems loss allowance, a 10 percent interest on paid-up capital, and Tk 0.13 margin for distribution. The Consumers Association of Bangladesh (CAB) has urged the Bangladesh Energy Regulatory Commission (BERC) to suspend these benefits in order to pressure Titas Gas to improve its services.
Dr. Alam also stated that they have provided evidence to the BERC, highlighting Titas Gas’s failure to meet the legally mandated gas quota that the company is obligated to provide. These concerns further undermine Titas Gas’s credibility and raise questions about its ability to fulfill its responsibilities to consumers.
Possible consequence in upcoming elections
The ruling party in Bangladesh could face political consequences if the proposed gas price increase is approved and implemented, particularly with the impending general election. The following factors shed light on why this proposal, if passed, could prove to be highly detrimental for the ruling party:
First and foremost, a substantial hike in gas prices would burden the general population and amplify their dissatisfaction. Given the already strained cost of living, such a move could significantly fuel public resentment towards the government.
Moreover, such a decision could be perceived as a display of insensitivity and detachment from the economic challenges faced by ordinary citizens. This perception would tarnish the government’s image and contribute to negative public opinion regarding their governance.
The opposition parties, ever vigilant for opportunities to criticize the ruling party, would undoubtedly exploit the gas price increase as a powerful tool to mobilise public opinion against them. In areas heavily reliant on gas-intensive industries or regions where the cost of living is a pressing concern, voters would express their dissatisfaction at the polls.
In light of these potential consequences, it is of utmost importance for the government to carefully deliberate the political ramifications of this proposal, especially with the forthcoming general election.
