Action against illegal gas connections needed

New gas connections to households have begun from this week after a long suspension for nearly three years. This is a good piece of news for those who were waiting for this for years together. Earlier, the Energy Division resumed new gas connections to industries on selective basis last year.
Despite the embargo on new connections, a section of unscrupulous officials and employees of different state-owned gas marketing and distribution companies provided illegal gas connections allegedly in exchange of bribe. The Petrobangla chairman alleged that the government lost revenue worth at least Tk 1.8 million (US$ 30,000) everyday due to illegal gas connections to household consumers alone. Petrobangla made a survey over illegal gas connections and found that around 9.0 million cubic feet a day (mmcfd) of gas was pilfered through the illegal connections to households.

Petrobangla identified that over 1,17,414 domestic connections were given in the Titas gas distribution and transmission area in violation of the decision of the authority in the last two-and-a-half years. The Titas authorities collected Tk. 2.0 billion as bills from 57,414 illegal connections. It was also found that about 60,000 consumers did not pay any money for their consumption of gas. Petrobangla estimates that around 31.47 mmcf gas is needed to meet the demand of residential consumers across the country. Already 11.08 mmcf gas are being consumed illegally. So the requirement for meeting the hidden demand of residential consumers is 20 mmcf of gas. 

The most interesting point is that such kind of pilferage was occurring in broad daylight, but nobody interfered in the affairs during the last two years. Even no staff of the gas marketing and distribution companies was nabbed or penalised for such act. Only Human Rights and Peace for Bangladesh, a law firm, came to the scene and filed a writ petition in November 2012 with the High Court (HC), seeking an embargo on such illegal connections. 

While announcing the lifting of ban on new gas connections, the government said that it would also legalise illegal gas connections with fiscal penalties. Analysts said such kind of widespread pilferage should not be dealt with only 'fiscal penalties'. Responsible officers and employees of the gas distribution and marketing companies should be arrested and jailed for such act. Why should only the consumers be slapped with 'fiscal penalties'? It is now clear that the errant employees of those companies lured the consumers to get the illegal connections in exchange of speed money.

According to reports, a huge sum of money, to the tune of Tk 3.0 billion, were deposited with Titas accounts by illegal gas consumers. The audit teams are unable to trace where from these money came as there are no records of these consumers. In this way, the government is losing a huge amount of money as revenue.

When the government halted gas connections to households in July 2010, it promised to restart it when the overall supply would reach 2,200 mmcfd. It also promised to rationalise the prices of liquefied petroleum gas (LPG) and piped natural gas to households. The country's overall gas production exceeded 2,200 mmcfd about one year ago. But the government took more than one year to resume gas connections. Some 15 million mmcfd has been earmarked for the new household gas connections. The decision on rationalising the LPG price is yet to be taken.

The government deserves appreciation for taking pragmatic steps to improve the capacity of the state-owned BAPEX for more gas exploration and production. The authorities expect to get adequate gas soon from the newly discovered gas fields such as Sunetra and Srikail. At present, the country is producing 2,200 mmcfd gas. Of the total production, 55 per cent is supplied to power stations, 16 per cent to industrial units and 10 per cent to fertiliser factories across the country.

In the meantime, the government is also considering increasing the prices of natural gas for domestic consumers to meet the soaring costs of hydrocarbon exploration and gas purchase and to reduce wastage. Hinting about such a move, the energy adviser said recently that the prices of gas used by domestic consumers were much lower than those of other fuels. Hence, Petrobangla has proposed raising the prices to Tk 800 a month from Tk 400 for a single-burner gas stove and to Tk 1,000 from Tk 450 for a double-burner stove. 

Experts say there cannot be any justification to increase the prices in areas where residents receive gas supply only for four to six hours a day. For industrial users, the government should look into the possible impact on the production of the units. The small and medium enterprises could see their competitiveness dented if the gas prices are increased. Also, there is a need to improve supply side management to cut down on wastage of the utility. Only raising prices as a way of easing pressure on subsidies will not work. 

The knock-on effect of the prolonged ban on domestic and industrial gas connections was huge. Housing companies were unable to hand over the readied flats to their customers. House rents in the capital went up substantially due to scarcity of flats. Industrial growth was hampered. However, with the resumption of new connections, situation is expected to improve substantially. 

The government needs to take effective measures to stop illegal gas connections. The administrative set-up of the state-owned marketing and distribution companies should be streamlined in order to ensure healthy gas management in the country. Shahiduzzaman Khan//szkhan@dhaka.net
The financial Express. Published : Sunday, 12 May 2013