The Bangladesh Energy Regulatory Commission on Sunday announced a 33 per cent increase in gas prices for industries planning to get new connections or expand with additional gas consumption.
The new price came into effect on Sunday. The BERC announced the price in a press conference at its office in Dhaka in the afternoon on the day.
The unreliable national power grid necessitated for industries to generate own power, known as captive power, many of which industries also use gas, besides electricity generation, as a raw material for their productions.
The fresh price hike raised eyebrows for its discriminatory nature, allowing old gas connection owners to continue to pay the old price, as long as their consumption remains within their approved limits. Industrial expansion, particularly the expansion of local industry, is feared to be seriously hampered by the new gas price.
鈥業ndustries that can afford the price will stay in business,鈥� said Jalal Ahmed, chairman, BERC, replying to a question about potential consequences of the price hike on industries, particularly on new investors, whom the interim government is planning to attract, especially from abroad, by changing existing policies.
Jalal said that impacts of the price hike on industries remain to be seen and that the BERC and the government would closely monitor it.
Under the new BERC order, industries seeking new gas connections for captive power generation will have to pay Tk 42, instead of the previous price of Tk 31.50, for a unit of the energy. Old captive power producers wishing to increase their present capacity using more gas would have to pay the new price for additional gas supply.
Industries seeking new piped gas connections will have to pay Tk 40, in place of the earlier rate of Tk 30, per unit of gas. Existing industries seeking to expand with increased gas consumption would have to pay the new price for additional supply.
Those who were in the process of getting gas connections would have to pay the new price for half of its sanctioned limit while the聽 rest would have to be bought with the previous price.
Existing gas consumers would have to pay the new price if their consumption surpasses sanctioned limit, the proposal said.
Frequent increase in prices of energy such as gas and power, coupled with the Covid-19 onslaught and the prolonged dollar crisis, have been holding Bangladesh鈥檚 industrial growth back since 2017.
The last gas price hike which came in 2023 increased the price for industries to Tk 30 from Tk 16.
A flawed energy policy by the ousted Awami League government landed Bangladesh in a state of constant energy poverty. The flicker of hope lighted by AL鈥檚 fall in a student-led movement against discrimination has now been somewhat dampened. The interim government led by Nobel laureate Muhammad Yunus replaced the AL government.
Industries paid Tk 5.86 per unit of gas in 2009, the year the past AL government assumed power. The AL government grew increasingly authoritarian during its 15 years tenure, eventually effectively binning the BERC by overtaking energy price fixing authority through executive orders.
People were surprised when the BERC convened a public hearing on gas price hike proposal on February 26 on the ground of reducing government companies鈥� deficit. Except for the government gas companies, industrialists, consumer rights activists and some politicians attended the public hearing, expressing their disgust and dejection at the new government as it followed in the footstep of the AL government.
Besides a high system loss, which has recently hit double digit for the country鈥檚 largest gas distributor Titas, BERC鈥檚 technical evaluation committee said, adjusting taxes could save Tk 7.34 per cubic meter of gas.
The TEC was put in place to examine the government proposal for raising the gas price to Tk 75.72. The proposal was made on January 6, barely five months after AL鈥檚 fall.
After calling the BERC a 鈥榩ublic enemy鈥� during the public hearing, industrialists noted that arbitrary energy pricing turned many factories sick while prompting others to shut down during the AL rule. The Bangladesh Chamber of Industries particularly warned that a conspiracy against country鈥檚 economy was evident.
鈥楾he new price is discriminatory,鈥� said Consumers Association of Bangladesh鈥檚 energy adviser M Shamsul Alam, explaining that new investors would have to pay more for producing the same product, compared with the investors already in business.
鈥楾his will lead to an unequal competition which is unconstitutional,鈥� he said, adding that the ultimate burden of increased expenses would fall on people鈥檚 shoulder.
The gas price is calculated based on the import of 1,000mmcfd of liquefied natural gas, which accounts for a fourth of the supply. Never in the past, ever since the LNG import started in 2018, did LNG import reach its target, supplying far less gas to industries and households than they have been paying for.
Until November past year, the average LNG import was 579mmcfd. In 2023-24, the highest annual LNG import of 676mmcfd was recorded.
A technical evaluation of the BERC revealed in March 2022 that the Petrobangla pocketed Tk 2,538 crore by importing 553mmcfd less LNG than promised in the financial years 2019-20 and 2020鈥�21.
Petrobangla has planned to generate Tk 3,240 crore by increasing the price by 152 per cent.
Imported LNG is blended with domestic natural gas and supplied through the national grid. Three state-owned and two international companies are responsible for extracting domestic gas. Six local companies are in charge of gas distribution.
Each unit of domestic gas bought from local companies costs Tk 1.5. International companies charge Tk 4.5 for selling domestically extracted gas. Each unit of LNG, however, costs over Tk 60.
Energy experts said that LNG import could easily be avoided had Bangladesh invested in gas exploration as the country covers聽 geographical locations believed to be blessed with enormous gas reserve.
The CAB in an estimate released in 2019 said that checking inefficiencies and corruption could save Tk 10,549 crore in the energy sector annually.
The annual subsidy in the gas sector is Tk 20,000 crore.
