Tuesday, 23 Apr, 2024
  Dhaka
Tuesday, 23 Apr, 2024
The Daily Post
Fuel & electricity prices rise in executive order

Traders worried about price hike

Mohiuddin Rabbany

Traders worried about price hike
photo: Daily post
  • Due to the increase in the price of electricity, the price of goods will increase: M Shamsul Alam, Energy Specialist
  • Production will be hampered due to price hike, exports will decrease: Khorshed Alam, Director, BTMA

The government is adjusting the price of electricity to reduce the pressure of subsidy. But this combination means increasing the price. Consumers and experts said the ministry is strategizing to increase the price of electricity in the name of coordination.

The first phase of price adjustment every month is increasing from next month from March. In this phase, the price per unit may increase by 34 to 70 paisa, said the power division recently. The prices will be adjusted in phases over the next three years.

Meanwhile, traders said that the production cost of the factory will increase due to the increase in gas prices which will reduce exports. Last year, all industries were under great pressure due to the increase in gas prices. Meanwhile, factories are not getting gas at higher prices. The current price of gas per unit (one cubic meter) for all types of public and private power plants is Tk 14. The new price has been fixed at Tk 14.75. The price of captive gas has been increased from Tk 30 to Tk 30.75 per cubic meter. The energy division has termed the increase as a price adjustment, saying it will reduce the subsidy by Tk 570 crore in the current financial year.

There are eight consumer categories of gas users in the country. Of this, 37 percent is used in power generation, 23 percent in industry, 18 percent in captive electricity, 10 percent in household, 7 percent in fertilizer production, 4 percent in CNG and 1 percent in commercial and tea industries. On January 18 last year, the price of gas was increased by 82 percent on an average by issuing an executive order. At that time, the price of gas used in the power sector was increased by 179 percent. Residential gas prices have not been increased.

The production capacity of gas-based power plants in the country is about 11,000 MW. The captive power generation capacity is about 3,000 megawatts.

Earlier on June 5 last year, the Bangladesh Energy Regulatory Commission (BERC) increased the price of natural gas supplied to residential and industrial factories by more than 22 percent. At the consumer level, the BERC has increased the price of natural gas by 22.78 percent from Tk 9.70 per cubic meter to Tk 11.91.

Experts said that due to the increase in electricity prices, the cost of industrial and agricultural production will increase. The life of the common people has become miserable due to the increase in the price of everything including electricity.

Last year, all industries, including textiles, were under great pressure due to the increase in gas prices. Factories are not getting gas at higher prices. Due to the gas crisis, the production of many factories has been reduced by half. Last year, their costs increased by 8 percent due to the increase in gas prices. Still, the gas does not match the demand. Production is disrupted. Export orders are cancelled. Increasing the price of captive gas will increase the cost. Bangladesh will fall behind in the competition. Exports will decrease.

Khorshed Alam, director of Bangladesh Textile Mills Association (BTMA), said their cost increased by 8 percent due to last year's gas price hike. Still, the gas does not match the demand. Production is disrupted. Export orders are cancelled. Increasing the price of captive gas will increase the cost. Bangladesh will fall behind in the competition. Exports will decrease.

Consumers Association of Bangladesh (CAB), a consumer rights organization, thinks that the price of gas could not be increased by adjusting subsidy by reducing irregularities, corruption and wastage in the gas sector. Senior Vice-President of the organization Prof Dr M Shamsul Alam said the government has no moral stance to hike prices. This is tantamount to looting from the customer, the ultimate fraud.

Shamsul Alam added that due to the increase in the price of electricity, the price of goods will increase further. People will be under more pressure. The purchasing power of the buyer will decrease. He said consumers will struggle to meet demand. As a result, consumers will reduce the service. VAT and taxes will be reduced. The government will lose revenue. There will be a budget deficit.

Explanation of the Department of Energy:

According to the energy department, the government has adjusted the gas in the public interest. Due to the difference between the production, import and supply price of natural gas and the sale price, the government will have to provide financial subsidy of about Tk 6,570 crore in this sector in the fiscal year 2023-24. As a result of this price adjustment, it may be possible to limit the existing subsidy of LNG to Tk 6,000 crore considering the current market price and dollar exchange rate.

ARS