Home Bangladesh Jalalabad Gas Co will incur loss of Tk 728cr in 2-yr for Lafarge
Bangladesh - February 11, 2024

Jalalabad Gas Co will incur loss of Tk 728cr in 2-yr for Lafarge

Reward of uneven deal

Staff Correspondent : Even with high prices, the industries of different sectors of the country are not getting gas properly. The government is now in reverse danger by signing a gas supply contract with France-based multinational cement company LafargeHolcim Bangladesh Limited (LHBL) in an extremely critical situation.
Even though the price of gas has been increased in the industries, Jalalabad Gas Transmission and Distribution System Limited (JGTDCL) under the state-owned company Petrobangla has to account for a loss of Tk 26 crore per month while supplying gas at the contract price. This loss has to be drawn till 17 January 2026. This will cost the government more than Tk 700 crore in the next two years.
Jalalabad Gas Company has recently written a letter saying that it will not renew the gas supply contract with Lafarge Holcim due to non-payment of gas price at the fixed price by the government. LafargeHolcim’s 20-year gas supply contract with Jalalabad will expire on January 17, 2026.
Experts in the energy sector say that when local industrialists are not getting gas, they are losing hundreds of crores of taka, while supplying gas to foreign companies at very low prices is detrimental to the overall economy.

Now Bangladesh is buying and supplying LNG at higher prices. In the case of foreign investment, energy supply agreements should be done carefully, experts say, there should be a level playing field in terms of gas prices for domestic and foreign industries. Cement industry consumes a lot of gas. The agreement with Lafarge Holcim
Need to check.
Attempts were made to contact Atiqur Rahman Managing Director (MD) of JGTDCLbut he could not be found. However, the company’s general manager (finance) Shahidul Islam told, “According to the latest tariff set by BERC (Bangladesh Energy Regulatory Commission), the bill is being collected by determining the price of gas. But LafargeHolcim is not paying the gas bill at the new fixed tariff. As a result, we are now losing Tk 26 crore every month. If this continues, we will become a loss-making company.’ He also informed about writing a letter about not renewing the contract with this multinational company.
Energy and sustainable development expert and former professor of BUET Ijaz Hossain told about this, cement industry requires a lot of energy. And there should be a level playing field in terms of price. Otherwise, investment will be discouraged. He said, our local entrepreneurs are not getting gas even with high prices. And it is not reasonable to give gas to foreign companies at low prices. It is necessary to look into what benefits are provided in the contract with Lafarge. We are bringing LNG at higher prices with borrowed dollars. That LNG cannot be supplied at a low price. He commented that energy supply agreements with foreign investors should be done more carefully.
Jalalabad Gas Company signed a gas supply contract with the multinational company on January 19, 2003. According to the terms, if no notice of renewal or extension of the contract is given by either party 18 months before the completion of the 20-year period, the period of the contract will be automatically extended by five years. For this reason, JGTDCL has given a letter not to renew the contract on January 25. MD of JGTDCL. In the letter signed by Atiqur Rahman, it is said that according to the contract, there is a condition of not renewing the letter before July 17, 2024. JGTDCL does not want to renew the contract at the end of the term.
The tension with the company started after BERC hiked gas prices in September 2015. After increasing the price of gas several times, they refrained from paying the increased price.
The dispute over the price of gas reached the court. In this case, the court ordered Lafarge Holcim to pay Tk 90.25 crore for the gas bill as per BERC fixed rates. In the judgment, the Appellate Division of the Supreme Court ordered the company to pay this amount in one-time and quarterly installments. LafargeHolsim has paid Tk 90.25 crore with the last installment on August 13 last year.
JGTDCL mentioned in their 449th board meeting in 2020 that the prevailing rate declared by BERC is Tk 30 per cubic meter. However, if gas is supplied at the rate of Tk 10.67, the company will face a huge loss. Excluding delivery charges, the loss will be at the rate of Tk 19.15. Due to this, JGTDCL will have to calculate a loss of Tk 26.90 crore every month.
The concerned official of JGTDCL said that Lafarge Holcim went to the international arbitration court in Singapore regarding this matter. Although the case was filed in Singapore, it was heard in Portugal. Later in September last year, the International Court of Arbitration ordered the return of Tk 90.25 crore paid to Jalalabad as gas bill. After this judgment against Jalalabad, LafargeHolcim again started paying bills at the contract price. They informed that the gas bill will be paid at the contract price from September last year to January 17, 2026. According to Jalalabad, if the gas price is paid at the contract price, the loss will be Tk 728 crore till January 17, 2026.
In 1997, Lafarge Surma Cement Factory was established in Tengargaon area on the north bank of Surma River in Chatak town of Sunamganj. Lafarge Surma and Holcim Cement merged in 2015. Holcim Switzerland and Lafarge are Paris based companies. The merger took the name Lafargeholcim. Lafarge is the only self-contained factory among the private cement factories in the country.
The company has two grinding stations at Meghnaghat in Narayanganj and one at Mongla in Khulna. The company manufactures cement from the main raw material of cement, clinker. The company’s own two cement factories produce 14 to 1.5 million tonnes of cement every year, which is 7 to 8 percent of the country’s total demand. Lafarge currently requires 1.6 million cubic feet of gas per day to sustain its production operations.

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