After electricity, the government has announced to increase in the price of natural gas one more time in the industrial sector in order by the executive order to adjust the subsidy. However, residential, CNG and tea industry gas prices remain the same. Prices increased in the power and commercial sectors too. The new price will be effective from this February.
This was informed in a notification signed by Sheikh Mohammad Belayet Hossain, Deputy Secretary of the Energy and Mineral Resources Department of the Ministry of Power, Energy and Mineral Resources on Wednesday (January 18).
|Gas prices have increased in six sectors|
|Sectors||Existing Tariff (Tk)||New Tariff (Tk)||Price Hike|
According to the notification, the price of gas per cubic meter has been fixed at Tk 16 to Tk 30 in the industrial sector and the price of gas supplied to the power sector has been increased from Tk 5.2 to Tk 14.
The price of gas in the captive power (industries’ own power generation) sector has increased from Tk 16 to Tk 30 (88%) per cubic meter, in large industries from Tk 11.98 to Tk 30 (150%), in medium industries from Tk 11.78 to Tk 30 (155%) and in small industries from Tk 10.78 to Tk 30 (178%).
At the same time, in the case of commercial gas connection, it has been increased from Tk 26.64 to Tk 30.50 (14%) per cubic meter.
On June 5 last year, the Bangladesh Energy Regulatory Commission (BERC) had increased the gas price where the wholesale price of gas per cubic meter was increased by 22.78 percent from Tk 9.70 to Tk 11.91 by effective from June of that year.
At that time, the price of gas was increased from Tk 10.70 to Tk 11.98 per cubic meter for large industries, Tk 11.78 for medium industries and Tk 11.93 for small, cottage and other industries.
However, this time the gas price hiked to record high.
Those concerned say that increasing the price of gas in the electricity, industrial and commercial sectors will not have a direct impact on people’s lives, but it will have an indirect impact. Meanwhile, the government says that this price increase will reduce their subsidy.
The Department of Energy and Mineral Resources has presented arguments in favor of increasing the gas price. They said the price hike was to coordinate subsidies and ensure uninterrupted gas supply in an explanation sent to the media after the increase in gas prices on Wednesday. It is said that the government has increased gas prices in the power, industrial, captive and commercial sectors to meet the demand for gas by buying LNG at high prices from the open market.
According to stakeholders, one of the areas where reforms have been underway for months to meet International Monetary Fund (IMF) conditions is the reduction of subsidies from the power and energy sectors. Gas and electricity prices are increasing due to fewer subsidies.
But the government says this will reduce the subsidy. Petrobangla is in a financial crisis, especially when buying LNG in the international market. To overcome this crisis, the government is taking loans from the IMF and IMF had stipulated a reduction in subsidies prior to that loan waiver.
Towards the end of last year, the government stopped the import of LNG from the spot market due to the increase in prices there. This reduces the supply of gas to industry and power generation. Industrialists have agreed to pay higher prices for an uninterrupted supply of gas. Several meetings of the government have been held with the top level of the government.
However, the increase in gas prices will increase the cost of power generation as well as domestic and export-oriented industries. 10 percent of the total cost of industrial production is considered fuel cost. This time, as the price of gas in the industry has increased from 155 to 178 percent, the average production cost will increase by 15 percent.
That means, to produce a product of Tk 100, where fuel used to cost Tk 10, now it will cost Tk 25. If the entrepreneur adds his profit to this price, it will be Tk30. That is, the price of all types of industrial products may increase by 30 percent.
President of Textile Mill Owners’ Association BTMA Mohammad Ali said, “Entrepreneurs are worried because of increasing the price of gas. The cost of gas was 25 cents per kg of yarn which will now stand at 49 cents.
Though small and medium industries were earlier given some concession in increasing industrial gas prices, this time gas price has been fixed at Tk 30 per cubic meter in all industries like big industries which may disrupt the development of small and medium industries.
Business leaders and experts viewed the increase as unimaginable and a shock, especially at a time of high inflation and recession fears in the West, the destination for more than 70% of Bangladesh’s merchandise exports.
Entrepreneurs say that they did not imagine that gas prices will increase so much in one jump. If this price is implemented, many industries will go into losses. Again, if an uninterrupted supply of gas is not ensured along with the implementation of new prices in February, the situation will be dire. Then there will be no other option but to close the factory.
Industrialists say the increase in gas prices could harm Bangladesh’s business competitiveness. Although some were willing to pay more for an uninterrupted gas supply, they did not expect this huge increase, which industries would not be able to afford.
Meanwhile, increasing the price of gas per unit from Tk 5 to Tk 14 will increase the electricity production and purchase cost of the Electricity Development Board by Tk 2 per unit which will again increase the overall production cost.