Tk18 lakh bonus for Karnaphuli Gas staff with money not its own

The Karnaphuli Gas Distribution Company Limited has awarded Tk18 lakh each in bonuses to its staff members for FY22. The bonus was paid from money the gas company was supposed to pay to Petrobangla.  

The money was earned from gas sales to Karnaphuli Fertiliser Company, a multinational. The gas company sells gas to Kafco at a rate higher than what the Bangladesh Energy Regulatory Commission (BERC) set for state-owned fertiliser companies.

Instead of paying Petrobangla the additional amount, the Karnaphuli Gas held on to the money in violation of gas distribution guidelines and Berc's order, according to an expert. 

Energy Division sources told TBS that the government provides gas to state-owned fertiliser factories at a subsidised rate. But Kafco is a joint venture multinational company established with the shareholding and support of the governments and private sectors of Bangladesh, Japan, Denmark, and the Netherlands, they said. Therefore, the company has to buy gas at a higher rate, they added.

Karnaphuli Gas Company has not paid Petrobangla a staggering Tk2,834 crore, additional money earned from gas sales to Kafco, as of June 2022.

According to Berc, all earnings from gas sales, except for distribution charges, are to be paid to Petrobangla. However, this has not been the case since the company's incorporation in 2010. 

When asked about the distribution of the additional money gained from Kafco as profit bonus, Engr Md Rafiqul Islam, managing director of Karnaphuli Gas, told The Business Standard that the profit has been shared as per the decision by the company's board of directors chaired by the energy secretary.

"You know a company runs as per the decisions of its governing board which is an autonomous body. So, we cannot but act out the board's decisions. If there is any order from the regulatory commission, we must let the board know about it."

Professor Dr M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, however, viewed this as a "predatory profit bonus".

"Showing the additional income from gas sales as its revenue is a complete violation of gas distribution guidelines and Berc's order," he added.

Amid the depleting production of natural gas, Petrobangla has been importing expensive liquefied natural gas (LNG) in order to supply required gas to all sectors to keep the wheels of the economy moving.

Petrobangla spends Tk46.85 for each cubic metre of LNG while it gets a weighted price of Tk21.27 from gas distribution companies for each cubic metre of LNG.

Therefore, Petrobangla has been hit hard by a financial crunch, making the lone government-run energy importer to curb LNG imports to manage import costs.

Till June 2019, the Karnaphuli Gas company's additional earnings from selling gas to Kafco was Tk9.29 per unit as it charged the fertiliser company Tk12 per cubic metre while the Berc-set rate was Tk2.71.

After the regulator raised the price of gas for the fertiliser sector to Tk4.45 on 30 June 2019, Karnaphuli Gas' additional earning from Kafco was Tk7.55 per cubic metre until another hike in retail gas tariff in June 2022.

Prior to the formation of Karnaphuli Gas Company, Kafco was a consumer of Bakhrabad Gas Distribution Company Limited – another gas distribution company that supplies gas in Noakhali, Cumilla, and Chandpur.

At that time, Bakhrabad Gas used to deposit the additional money received from Kafco to Petrobangla, reads a document of Petrobangla.

But Karnpahuli Gas stopped depositing the additional money gained from Kafco after starting operations in 2010. Later in February 2018, the Energy and Mineral Resources Division directed the company to deposit 50% of the additional money to Petrobangla, which most energy experts viewed as a total violation of the Berc order.

Hence, Petrobangla wrote dozens of letters to Karnaphuli Gas asking it to provide a detailed report on the volume of gas supplied to Kafco since 2010, the price of the supplied gas, and the amount received from Kafco.

But, the gas distribution company neither provided the required report nor deposited the money on a regular basis.

Md Abdul Jalil, chairman of Berc, told TBS that he was not aware of whether Karnaphuli Gas has a separate contract with Kafco or not.

"But, if they [Karnaphuli Gas] sell gas to Kafco at a higher rate than the Berc's tariff, the regulatory commission will take necessary action in case of any allegations," said Abdul Jalil.

Dr Md Khairuzzaman Mozumder, secretary of the Energy and Mineral Resources Division and also the board chairman of Karnaphuli Gas, told The Business Standard that he is not aware of the matter as he has got the appointment recently.

"It would not be fair commenting on the issue, before knowing it," he said.

Petrobangla Chairman Zanendra Nath Sarker also replied in the same way as he also got appointed to his current post early this month.

TBS also sent a text message to Water Resources Secretary Nazmul Ahsan, who was serving as Petrobangla chairman when Karnaphuli Gas distributed the profit bonuses last year, for his comment but he did not reply.