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‘20-year Energy Security Fund formulated for LNG import’

The government has created an Energy Security Fund to finance in the country’s gas exploration and extraction projects, including the import of liquefied natural gas (LNG) to meet the scarcity of natural gas.

On April 10, 2018, the Energy and Mineral Resources Division has issued a notification on the formation of the Energy Security Fund Policy-2018.

According to the notification, the fund will be used in exploring, extracting, purifying, transmitting, distributing gas, importing LNG and taking other related projects with the help of this fund to ensure the energy security in the country.

However, it is seen in the analysis of the notification that a large part of this fund will be spent for importing LNG.

The government will import 500 mmcf of LNG daily and provide it to national gas grid from May next.

It is said that the period of the fund will be 20 years from the date of policy issuance. After the expiration of the timeframe, the government will decide in this regard.

The Bangladesh oil, gas and mineral resources corporation (Petrobangla) under the Division of Energy and Mineral Resources will take the charge of managing the fund. An eight-member committee convened by Petrobangla chairman has been constituted to fix the implementable projects to be run by the fund. The General Manager of Petrobangla LNG Cell will be the member secretary of the committee.

In the circular, it has been stated that the purpose of forming this fund is to take short, medium and long-term measures to ensure safety in energy supply.

If the project run by the money of the fund is considered profitable or commercially successful, then the taken investment will have to be repaid within 15 years of the beginning of the project, with the grace period of five years, on a six-month basis in 20 phases with 2 percent interest including service charges. However, the service charges will not be applicable during the grace period.

The money, used only for gas exploration projects, will not be refundable if the gas is not available for extraction, or if the gas extraction is not considered economically profitable.

Besides, the money spent for hiring the project consultant or experts or conducting surveys will not be refundable. In this case, the money mentioned in this regard will be regarded as donations.

It is here noted that the Bangladesh Energy Regulatory Commission, in an order to increase the price of gas at the consumer level on August 27, 2015, directed to form this fund.

Later, the Division of Energy and Mineral Resources formed the fund effective from September 1, 2015, said the notification.

According to the commission order, the asset value of gas produced in the country will be deposited to the energy security fund for consumers` interest, with a weight average cost of 1.01 per cubic meter and the interest on the savings will also be kept in the fund.

Later, the money will be spent on various projects.

However, Energy Regulatory Commission has already directed to allocate approximately Tk7,000 crore for one year to Energy and Mineral Resources Division from its Energy Security Fund for the purposes of LNG import and operations of LNG terminals.

The Security Fund received around Tk 6,000 crore as of December 2017.

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