Arbitration in favour of refunding LafargeHolcim

An arbitration verdict was passed in favour of LafargeHolcim Bangladesh Limited, enabling it to get refunds for excess charges imposed by state-run Jalalabad Gas Transmission and Distribution System Limited on natural gas consumption. 

The multinational cement producer paid Tk 227.5 crore in excess up to June 30, 2023, according to its financial report for the second quarter of the current financial year of 2023-24.

The LafargeHolcim received the information through its counsel on September 15, according to a statement posted on the Dhaka Stock Exchange website yesterday.

In February 2021, LafargeHolcim Bangladesh decided to resort to arbitration to settle a dispute over the Jalalabad charging higher than the price previously agreed upon.

The sales deal came into effect in 2003 for the cement company's plant located at Chhatak in Sunamganj.

During the arbitration proceedings, the LafargeHolcim argued that their gas sales agreement has a ceiling price, the maximum rate that the state-run gas company could charge.

The Jalalabad argued that the price fixed by the government or Bangladesh Energy Regulatory Commission (BERC) shall be applicable irrespective of provisions of the ceiling.

The arbitration tribunal declared that the ceiling was a valid and enforceable provision.

Under the contract, the natural gas was priced at about Tk 7.80 per cubic metre. But the BERC set gas prices for industrial consumers at Tk 10.70 per cubic metre with effect from 2019.

The tribunal, as per an Appellate Division order of the Supreme Court, ordered the state-run company to refund excess sum paid by the LafargeHolcim.

Shares of the LafargeHolcim rose 1.46 percent to Tk 69.70 at the DSE yesterday.