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Gas tariff hiked by up to 155pc for industries

Addl cost to put burden on pvt sector: DCCI

  • Special Correspondent
  • 19 January, 2023 12:00 AM
  • Print news
Gas tariff hiked by up to 155pc for industries

The government raised gas tariffs for the power, industrial, and commercial sectors by a minimum of 14.48 percent and a maximum of 179 percent.

The new tariffs will take effect in February.

Gas prices for households, CNG-powered vehicles, fertiliser production and tea gardens will remain unchanged, according to a gazette notification issued Tuesday night.

Last June, the Bangladesh Energy Regulatory Commission (BERC) increased the tariff by 22.78 percent on average.

A government executive order on January 12 raised electricity prices for consumers by an average of 5 percent.

Natural gas consumption for electricity generation has been increased to Tk 14 (179 percent) per cubic metre in the new tariff adjustment.

For captive power plants, the price will increase from Tk16 to Tk30 (88 percent), while for large industries, the price will increase from Tk11.98 to Tk30 (150.41 percent).

As for medium industries, the tariff has been raised from Tk11.78 to Tk30 (154.67 percent rise).

And for hotels, restaurants, and other commercial entities, the gas tariffs have been hiked to Tk 30.50 from the existing Tk 26.64 per cubic metre (14.48 percent).

Economists and energy experts said that the rise in gas prices will increase the cost of production and price of essential commodities.

The government has taken the decision to raise the natural gas prices due to the import of LNG from spot market at high prices to meet local demand, the Ministry of Power, Energy and Mineral Resources said in a statement.

It also aimed to reduce the subsidy in the energy sector and ensure smooth supply to consumers.

In the statement, the ministry said all types of energy prices are now unstable due to the Russia-Ukraine war.

Due to the war, the cost of insurance, risk, bank interest as well as dollar prices have increased significantly for importing fuels.

The government suspended the LNG import from spot market since July, 2022 due to volatile international market. So, the government is going to adopt rationing in supply of natural gas in different sectors.

Besides, the government has already endorsed the opinion from different stakeholders to best use natural gas and electricity against supply.

Dhaka Chamber of Commerce and Industry President Sameer Sattar said, “The government had to increase the gas prices due to its own unavoidable reasons.”

“However, there is a positive thing that it [the price hike] will not bring any immediate impact on households, agriculture and fertiliser sectors as the hike is not applied to them.”

“This move will impact industries, regardless of their size, as they may lose their competitive edge due to their cost of production going up,” he said, adding that small and cottage industries may try to pass on the additional costs to their end consumers as they face cost of production hike.”

“When we were recovering from Covid pandemic effect, during that time, the ongoing Russia-Ukraine war has put further uncertainty in global economy. Therefore, any type of additional cost will create a burden for the private sector,” he added.