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Gas price hike to affect industries adversely

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13th-Apr-2019       
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The proposed hike in gas price will take a heavy toll on the industries which are highly dependent on gas to run. Insiders said the input costs will go up for the energy-intensive industries that produce fertilizer, textile, garments, cement, and steel if the gas price is hiked. Bangladesh needs to lower energy tariff and ensure uninterrupted supply to remain competitive against its competitors such as Vietnam, Indonesia, Myanmar and Cambodia. Otherwise, it will create roadblock in achieving our long-term economic visions.
The impact of the proposed tariff hike will be severed for small and medium enterprises in the entire manufacturing value chain. As per the proposals of state-owned gas companies, power plants will pay Tk 9.74 per cubic metre of gas instead of the existing rate of Tk 3.16 -- a rise of 208 percent. They have proposed increasing the tariff by 96 percent to Tk 18.88 per unit from Tk 9.62 for captive power and by 132 percent to Tk 18.04 per unit from Tk 7.76 for industries. The government has moved to increase the gas price following the beginning of the import of liquefied natural gas amid fast-depleting domestic gas reserves, growing demand and no new discoveries.
Bangladesh Textile Mills Association said that the millers had to use captive generators to get uninterrupted supply of electricity while low gas pressure bound the manufacturer to delay shipment, meaning losing competence.
Due to gas and electricity price hike, the non-food inflation will increase by 1.5 per cent points and 1.05 per cent points respectively. So the government should raise the price gradually instead of hiking it instantly. When the textile millers have been passing hard time due to misuse of bonded warehouse, smuggling, flood of bordering country's clothes in the domestic market, the tariff hike of gas would put impassable block in achieving global competence.

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