Raising price of household will add to hardship

THE government has prepared a proposal to raise the household gas prices with a view to reducing consumers’ reliance on piped gas and encouraging them to use liquefied petroleum gas (LPG). The proposal will be sent to Bangladesh Energy Regulatory Commission (BERC) this month, said Nasrul Hamid, State Minister for Power, Energy and Mineral Resources, as per a report of a local daily.
A household currently has to pay Tk 450 a month for a double burner stove. “It might be Tk 750 or 1,000 [after the hike],” Hamid mentioned, adding that the prices of gas used in other sectors too would be increased gradually. The final decision on the price hike, however, will be taken by the BERC.
Hamid said the government pays Tk 500 as subsidy for each LPG cylinder but people still are not using it. Plans are there to further increase the LPG subsidies so that consumers can easily afford it, he added. “On one hand, we are proposing to hike the price of piped gas and planning to increase the LPG subsidies on the other.” Currently, an LPG cylinder costs between Tk 1,300 and Tk 1,400. According to the State Minister, the country’s gas reserves now stand at 14.94 trillion cubic feet. In light of the current pace of consumption, the reserves are enough to supply gas for the next 15 years even if no new gas field is discovered in the meantime.
It is unfortunate that the government cannot even supply the total demand for LPGs existing in the market – currently estimated at between 3,00000 and 5,00000 tonnes by industry insiders – in fact the government alone imports only 2,0000 tonnes and the private firms import the other 8,0000 tonnes. Although it is supposed to give a subsidy of Tk 700 per cylinder the market price is around Tk 1,450- Tk 1,600 – so most of the subsidy – if given at all – is eaten up either by corrupt officials or by firms – leaving the unfortunate end users to pay full prices.
On top of that only 12 percent of the total gas production of Bangladesh goes towards lighting kitchen fires – most of it is used to make electricity. So not only is the government unable to give a proper supply to most of its households – it cannot even meet LPG demand as well. While the idea of importing LPGs is a sound one ¾ the dramatic difference between supply and demand either suggests an inability of firms or the government to import LPGs or a collusive actions by the five firms who do import it so as to hike up prices permanently – thus contributing to inflation.
It remains the duty of the government to see that it does not rob ordinary gas consumers to pay the firms who import LPGs. It should ease up regulatory barriers to allow more firms to import LPG cylinders or ensure a reliable and cheap supply of gas to those households who are fortunate to have piped connections – simply raising prices is surely not the solution as it will only decrease real incomes and hit living standards in these days of economic stagnation.