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Biggest ever gas price hike

Business leaders fear to wreck havoc on economy

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Kazi Zahidul Hasan :
As the gas tariff is going to get biggest ever rise from July 1, business leaders fear its potentially worrying implications for the economy as a whole.
The Bangladesh Energy Regulatory Commission (BERC) will officially announce the tariff hike next week, sources said.
Terming the hike irrational and unethical, business leaders said that it would create a massive pressure on all economic sectors, including manufacturing, power generation, transport and households.
Expressing serious concern over gas price hike, Osama Taseer, President of Dhaka Chamber of Commerce and Industry (DCCI) said that it would take a heavy toll on the industries, which are highly dependent on gas to run their factories.
"Cost of production at energy-intensive industries like fertilizer, textile, garments, cement and steel will go up significantly as a result of gas tariff hike," he said adding that the price of steel and cement would go up manifold following the gas price hike dealing a blow to the ongoing infrastructure development across the country."
When asked, he said that in the entire manufacturing value chain, the impact would be severe for Small and Medium Enterprises (SMEs), which accounts for 60 per cent jobs in manufacturing sector.
Osama Taseer cited that the government should ensure cheap and uninterrupted energy supply to the industries to help maintain their edge over regional competitors.
"Otherwise, it will hold back the investment and job growth and thereby create road block in achieving the government's long-term economic visions."
Earlier, Petrobangla and State-owned Gas Marketing and Distribution companies proposed raising gas tariff for household consumers by 80 per cent and for consumers of different sectors, including power, industry, and commercial clients by up to 211 per cent.
"An abrupt gas price hike will raise production cost of the export-oriented industries and
thus push them into a tougher competition in the global market," Abdus Salam Murshedy, President of the Exporters Association of Bangladesh (EAB) told The New Nation.
He said, production at export-oriented industries, especially apparel units, will be unsustainable due to increase in gas tariff for the industrial and captive power clients. This could affect the country's overall export.
"The textile sector is highly dependent on gas to run
captive power generators. An abnormal increase in gas tariff will send the sector to a deep crisis," Mohammad Ali Khokon, President of the Bangladesh Textile Mills Association (BTMA) told The New Nation.
He said local textile mills are running their production on imported raw materials and cotton. They have to compete with global players, like India, China and Pakistan, which have their own raw materials.
"A fresh rise in gas tariff will create additional burden to the local mills and thus will leave them in a dire situation," he said.
The BTMA President cited that the textile sector employs over three million people and investments of about $7 billion.
"So considering the investment and economic impact, the government should keep textile sector out of the purview of gas tariff hike."  
While talking to The New Nation, Md. Siddiqur Rahman, Vice-President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said there is no scope of gas price hike when the industrial sector is under pressure of rising cost of production.
"A fresh gas price hike will only worsen the situation further. It will also leave adverse impact on investment and job creation," he said, adding, "The government should promote investment and jobs to sustain the current rate of GDP growth and achieve the country's Sustainable Development Goal (SDG)."      
Expressing grave concern over gas price hike, Md. Siddiqur Rahman said, "We all know that gas price hike will wreck havoc on economy. So, my question is that for whose interest the gas price will be increased."
Considering the impact of gas and electricity tariff hike on economy, business leaders called for a long-term energy policy so that businessmen can make proper investment decisions and run their enterprises successfully.
They also said that the government does not need to hike energy prices in regular intervals if gas and electricity pilferage and corruption are curbed.
Over the past one decade, the country's energy regulator (BERC) raised natural gas tariff thrice at the consumers end.

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