The price hike of natural gas and electricity would increase the cost of production and the country's export business would lose its competitive edge, said industry insiders.

They said increasing the cost of doing business, by hiking energy prices, was unjust and illogical at a time when the prices of almost all basic commodities and fuel have been dropping across the world.

They demanded that the government reconsider the decision of the Bangladesh Energy Regulatory Commission (BERC) to hike the prices of natural gas and power by 26.29 percent and 2.93 percent respectively.

Road Transport and Bridges Minister Obaidul Quader, meanwhile, hinted at higher transport fares against the backdrop of hike in energy prices.

Bangladesh Road Transport Authority would sit in a meeting soon to adjust transport fares following the price hike of energy, he told The Daily Star over the phone last night.

Political parties, including the BNP and Jatiya Party, denounced the price hike decision and demanded its immediate withdrawal.

Jahangir Alamin, the immediate past president of Bangladesh Textile Mills Association (BTMA), said the operating cost of businesses would increase with the price hike of gas and power.

The BTMA member factories are the highest consumers of natural gas. They could supply 90 percent raw materials for the knitwear and 40 percent to woven sub-sectors with their current capacity, industry insiders claimed.

The garment makers, who use the locally made yarn and fabrics, would purchase raw materials from foreign sources at cheaper prices and the domestic spinners, weavers and dyeing factories would be in trouble, as they had invested over 5 billion euro in the textile sector, Jahangir said.

Expressing concern over the energy price hike decision, Abdus Salam Murshedy, president of Exporters' Association of Bangladesh, said definitely the BERC's decision would affect the export-oriented sectors, especially garments, which contributes to more than 80 percent of the national exports.

Compared to the first month of the previous fiscal year, exports dropped by 11.96 percent in July, the first month of this fiscal year. This was due to a weak euro against the taka and continued pressure of international retailers to reduce garment prices.

"Bangladeshi exporters, especially the garment, would lose their competitiveness in the international market due to price hike of gas and power when other countries have been enjoying the benefits of falling fuel prices," Murshedy said in a statement.

China, India and Vietnam not only reduced energy prices several times over the last few months, but also devalued their domestic currencies.

"But, in case of Bangladesh, both the prices of gas and power and the taka appreciated against the euro and the US dollar. So our export sectors will have to face the challenges further due to the latest move by the BERC," Murshedy said.

"Domestic steel and re-rolling mill industries will face a severe challenge due to the hike in natural gas and power prices," said Sheikh Masadul Alam Masud, chairman of Bangladesh Auto Re-Rolling and Steel Mills Association, in a statement yesterday.

President of the Federation of Bangladesh Chambers of Commerce and Industry Abdul Matlub Ahmad, however, said although the price hike of gas and power would affect production cost, it would ensure continued supply of energy to factories.

"We need high pressure of gas for running the factories. We are ready to pay a bit more if we get the continued and adequate supply of gas and power to the industrial units," Matlub told The Daily Star over the phone.

Matlub, however, said many factories could not go into fully-fledged operation due to lack of gas connections. But recently Prime Minister Sheikh Hasina approved 355 new industrial gas connections which would help the industries significantly, he added.

"After a prolonged political crisis from January to March of this year, we are trying to revive our business. But we will have to face stiff competition due to the price hike of energy," said Reaz-Bin-Mahmood, vice-president of Bangladesh Garment Manufacturers and Exporters Association.

The government should have reduced the diesel price as the price of oil dropped almost $39 per barrel from $120 within a few months, he said.

POLITICAL REACTIONS

Protesting the fuel price hike decision, the BNP yesterday demanded immediate end of the move.

"Gas tariff has also been hiked even though the gas sector is making profit," BNP Spokesperson Asaduzzaman Ripon said at a briefing at the party's Naya Paltan office.

"We call upon the government to arrange a fresh and transparent hearing on the issue with all stakeholders. We hope the government, considering public sufferings, will move away from its anti-people decision of raising the power and gas prices." Ripon said.

In a statement, Opposition Leader Raushan Ershad said people expected that the government would decrease gas and power tariff as prices of fuel has dropped a lot in the international market.

"Instead, the government increased power and gas tariff which will have a negative impact on the poor and middle income people," she said.

Communist Party of Bangladesh yesterday held a rally and procession in the city protesting the decision. Speakers at the programme termed the government's step "illogical and unacceptable".