Prime Minister Sheikh Hasina yesterday instructed the import of liquified natural gas from the spot market by the private sector as the government looks to alleviate the industrial energy crisis that is threatening to derail Bangladesh's growth momentum.
Earlier in July, Bangladesh paused the spot purchase of LNG due to a steep rise in price in the global market, a move that has affected industrial output as gas supply to factories is rationed.
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One such casualty is sugar, whose price is scaling new highs in recent weeks as decreased refining in factories has choked supplies.
A secretary brought this issue to the fore in yesterday's meeting of secretaries at the Prime Minister's Office in Hasina's presence, The Daily Star has learnt from people involved in the closed-door discussion.
Despite strict monitoring and other measures, the commodity prices remain sticky downwards, he told the meeting.
Subsequently, inflation averaged 8.75 percent in the first four months of fiscal 2022-23 -- a long way off the target of 5.6 percent set in the budget for the year.
While tax waivers and shifting away from the ad valorem duty model may help, the situation will not suitably improve unless normal gas service to factories is resumed, meeting attendants said quoting the secretary.
Ad valorem duty is a duty levied as a percentage of the value of the services or goods being imported, rather than on their weight or the number of units.
Subsequently, the secretary requested the prime minister to allow LNG imports such that regular gas supply to factories can resume.
In response, Hasina directed the energy ministry to get small LNG cargoes from the spot market as soon as possible.
The representative of the ministry of power, energy and mineral resources then pointed out that huge volumes of greenbacks would be needed as the LNG price remains elevated in the global market.
This week, Asian spot LNG prices hit a seven-week-high, tracking European gas prices on cooler weather forecasts and after Gazprom threatened to further reduce gas flows to Europe, reports Reuters.
"Since the factory owners are willing to pay more for gas, let them buy gas as per their requirement from the private sector," Hasina said at the meeting.
The laws of the land allow private sector players to import gas, one of the secretaries told the meeting.
Subsequently, the PM gave the green light to LNG import by the private sector.
"In that way, the government will not have to pay subsidy," Hasina said, while criticising the energy ministry for lack of foresight and forward planning.
At present, Bangladesh is procuring LNG on a government-to-government long-term arrangement with Oman and Qatar. The two countries have denied requests for more gas.
From next year, Bangladesh would be getting LNG from Brunei after a deal was struck last month by the two parties during Brunei's Sultan Hassanal Bolkiah's three-day visit to Dhaka.
"Had we made such arrangements before, we would not have been in this position now. There should have been long-term planning for energy import," Hasina said, while instructing the ministry to seek alternative sources for energy imports with exigency.
But for food imports, the premier ordered restraint.
Due to the Ukraine war, the prices of fertiliser, wheat, rice, edible oil and fuel have increased manifolds alongside the transportation costs, she said.
"We must reduce our dependency on food imports -- production must be scaled up as much as possible."
At the meeting, the PM told the secretaries that the ongoing global economic crisis due to pandemic and Russia-Ukraine war will not go away very soon and the next year might be tougher, said sources.
She went on to order food production on the 3 lakh acres of unused land spanning Chattogram and Sylhet.
"This is not my word. It is said that a famine may emerge before the world. We have to take measures in advance so that the looming famine never strikes our country," Hasina said, reports BSS.
There must be no shortage of food during Ramadan, she said, while directing the commerce ministry to take measures accordingly.
She called for strong supervision such that food prices do not spiral during the Muslim holy month.
The openings of letters of credit for Ramadan essentials should not face any hold-ups, she said.
"Many non-essential items are being imported but when it comes to opening LCs for food items, there are problems," said a meeting participant.
Hasina then asked the representative of National Board of Revenue why no action was taken on the list of 330 non-essential items sent by the commerce ministry in August.
She then instructed the NBR to take steps to bring down the import of the non-essential items on the list.
The non-essential items include: 1,500cc car, sports utility vehicle, furniture, fruits, mineral water, home decorations, packaged food, jam, jelly, juice, soy sauce, ice cream, tobacco, door, door frame, suitcase, trunk, handbag, leather products, cement, tableware, fridge, compressor, lead battery, oven, tiles, toys, sanitary products.
The supplementary, customs and regulatory duties on the 330 products would be hiked and measures would be taken such that those products are not snuck into the country through illicit ways.
The PM also ordered halting those projects that take long to implement and whose output takes a while. Small projects with fast turnover should be prioritised.
"We are not going to be in danger but we have to take measures in advance so that we are not in trouble in future. We are taking all the measures carefully to this end," she said, reports BSS.
She also instructed the ICT ministry to keep a strong watch on social media such that none can spread misinformation about the country's foreign exchange reserves, sources told this newspaper.
Foreign currency reserves stand at $34.1 billion as of November 23, as per the central bank's definition.
"There is a lot of talk on the banking sector -- let us find out what the real scenario is," Cabinet Secretary Khandker Anwarul Islam quoted the PM as saying in a press briefing at the secretariat after the meeting, reports UNB.
The PM instructed the financial institutions division to fill her in on the matter.
The current public discourse on the irregularities at Islami Bank, the country's largest private sector bank, was also discussed at the meeting. "This issue will be looked into as well," Islam said.
The meeting also decided to ensure stability in internal procurement, purchase and food import to keep the food stock above 15 lakh tonnes.
"Right now, we are in a comfortable zone," he said, adding that the government silos have 16 lakh tonnes of rice as of November 22.
The programmes to provide food to one crore families at a subsidised rate -- Open Market Sales, Food Friendly Programme, Vulnerable Group Development -- will continue.
Hasina gave special directives for project implementation and instructed officials to be more careful in case of foreign-funded projects, Islam said.
"We have recently seen that expenditure in foreign-funded projects has slowed. The flow of foreign currency will increase if the expenditure rises. When we spend less, development partners give less," he said, adding that all secretaries were instructed to focus on the issue.
A suggestion was also made to curtail unnecessary expenditure in government offices.