The Bangladesh Energy Regulatory Commission (BERC) has taken initiative to increase gas prices for seventh time in the last 10 years.
People will have to bear the burden of the gas price hike in every sector as the prices of goods, power and public transport fare will increase, experts forecast.
Businessmen will increase the price of goods, the government will increase the power price and the transport owners will raise fares to meet the added cost, they said.
The gas price hike would affect the price of edible oil and sugar too. Overall, it would affect livelihood, which will increase the inflation rate.
“The gas price hike will affect the prices of power, production of goods and other sectors. The businessmen will increase the price of goods and services. As a result people will have to pay more prices for everything,” Consumers Association of Bangladesh (CAB) energy adviser professor M Shamsul Alam told Prothom Alo.
CAB is a non-political, non-profit and voluntary consumer organisation to protect consumers from commodity adulteration and artificial price-hike.
Distribution companies submitted proposals to the BERC to hike gas price in December last year. A public hearing was held on the proposals of two companies on Wednesday.
On Tuesday, the hearing was organised on the proposals of two companies at TCB (Trading Corporation of Bangladesh) auditorium in the capital’s Karwan Bazar area.
The price hike was given consideration after Bangladesh started importing liquefied natural gas (LNG) from April 2018 at a price of Tk 30 per cft, which is fourfold than the local gas.
The government took initiative of raising gas price before the 11th parliamentary elections, held on 30 December 2018.
The BERC increased the price but the government paid around Tk 45 billion in subsidy fearing people’s negative reaction before the national elections.
Now, two months after the election, BERC has once again taken initiative to increase the gas price.
The distribution companies proposed to hike the price by 103 per cent on an average, which is higher than the past.
Increased gas prices will hit the export-oriented industry sector hard as it might face stiff competition in the international market due to higher production costs.
Companies that cater to the local market will also face difficulties. Foreign products might take over the local market if production costs of localproducts go up, as is the case of local textile factories.
Bangladesh Textile Mills Association (BTMA) president Mohammad Ali thinks not a single local yarn factory will be able to face the challenge if the gas price is increased as per the proposed rate.
“Currently, we pay Tk 11.76 as gas price to produce 1 kg yarn. If the gas price is increased as per the proposed rate, the cost will be around Tk 23.80. We’re already facing stiff challenge from international yarn factories even at the current rate,” he said.
Gas and power is the most used in steel production. According to industrialists, they spend around Tk 7,000 on fuel for production of one tonne of iron rods. They will have to spend around Tk 7,000 more per tonne if the proposed rate of gas price is implemented.
Currently, the price of a tonne of good quality iron rod is about Tk 65,000-67,000.
Bangladesh Auto Re-rolling and Steel Mills Association former president Sheikh Masadul Alam said, “The consumers might face added pressure in the future as the gas price will increase and dollar price is on the rise. The pressure of tax will be added to that if the new VAT law is implemented.”
Currently, the power sector uses around 40 per cent of the total supply of gas (3.2 billion cft) in the country every day. The Bangladesh Power Development Board (BPDB) will then decide to raise power prices. This too will affect the industrial sector.
According to an estimate of Bangladesh Tariff Commission, the power and gas cost for production of per kg sugar is Tk 0.50. For the production of oil, the cost is Tk 0.60.
The price hike will affect those two products too.
“We produce oil, sugar, flour, semolina and poultry foods. Huge amounts of gas and power is required for this. The gas price will naturally affect the production cost,” City Group director Biswajit Saha told Prothom Alo.
If the gas price is hiked, it will be seventh time in the last 10 years. The sectors with the highest price hike are the captive power plants and compressed natural gas (CNG).
Bangladesh CNG Filling Station and Conversion Workshop Owners Association general secretary Farzan Nur Bhuiyan said, “The latest proposal to hike gas prices is wrong. Implementation of this proposal will disrupt the transport sector.”
Writ seeking stay order
The High Court has fixed 31 March to hear on a writ petition filed seeking stay of the notice issued by the BERC for holding public hearing to adjust the gas price.
The bench of justice FRM Nazmul Ahsan and justice KM Kamrul Quader fixed the date on Wednesday.
CAB convener architect Mubassher Hossain filed the writ with the High Court in January this year challenging the BERC decision, taken in October last year, to increase gas price.
He filed a supplementary writ after the BERC took fresh initiative to raise gas prices. The hearing was held on Wednesday.
Lawyer Jyotirmoy Barua, assisted by Ripon Kumar Barua, moved for Mubassher Hossain and attorney general Mahbubey Alam sttod for Petrobangla while AFM Mesbah Uddin moved for BERC at the court.
Mahbubey Alam said there is no legal barrier to hold the public hearing as the court has not stayed it.
The coalition of left-leaning parties has threatened to enforce a shutdown if the initiative to hike gas prices is not stopped.