Gas price hike to hit export, industries

The latest gas price hike will fuel the cost of industrial production, transport fare and inflation and will also have a negative impact on Bangladesh's competitiveness in export, said a leading business chamber yesterday.

In a statement, the Metropolitan Chamber of Commerce and Industry (MCCI) in Dhaka also said the increased gas price would push up the prices of fertilisers, basic commodities and electricity.

Considering the consequences, Bangladesh Energy Regulatory Commission (BERC) should give a second thought to implementing the gas price hike by 22.7 percent in two phases for all consumers, said MCCI.

In the first phase that came into effect on March 1, the gas price went up by half the estimated increase.

The second phase should take effect on June 1 as per the decision of the energy commission. 

But the High Court stayed for six months the hike in the second phase, responding to a writ petition by the Consumers Association of Bangladesh.

The increase in the gas price might hamper reaching the government's overall export target of $60 billion, more than 80 percent of which will be garment exports, by 2021, according to the statement.

The energy commission decided to increase gas price on February 23 at a time when the country's garment sector is losing competitiveness in the international market due to the fallout of Brexit that weakened the value of pounds and the purchasing power of people in the UK, the third largest export destination of Bangladeshi garment products. 

On the other hand, the prices of cotton and yarn, two basic raw materials for apparel production, have gone up by 20-25 percent in the domestic market.

The gas price hike will take away Bangladesh's competitive advantages in sectors like garments, leather and footwear since industry-based power plants consume a large portion of the gas produced in the country, said MCCI.

The amount of daily gas supply is 2,750 million cubic feet, of which 300mmcfd is pilfered by unscrupulous people in Dhaka and Chittagong, it added.

The chamber suggested that the government should keep the public transport out of the purview of the gas price hike as it would add to the sufferings of people who are already under pressure because of high commodity prices.

The government should go for different alternative sources of energy to ensure its future stock.

“It is not possible to overcome all the challenges in the energy sector by only increasing the price of gas,” MCCI said in the statement.

As per the latest decision, industries that use generators for producing electricity from gas saw the gas price rise to Tk 8.98 per cubic metre from Tk 8.36 on March 1. The cost will be Tk 9.62 from June if the second phase hike is implemented.