Hike gas prices in phases, not at one go: BGMEA

The garment makers have urged the government to increase gas price in phases because it is tough to tolerate a sudden big hike amid the existing volatile domestic and global economic situation.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) made the call through a letter and today sent it to Tawfiq-e-Elahi Chowdhury, energy adviser to the prime minister, and Nasrul Hamid, state minister for energy and mineral resources.

In the letter, Faruque Hassan, BGMEA president, also urged the government to ensure uninterrupted and adequate power and gas supply to the industrial units for the continuity of the production.

The BGMEA also demanded for the full waiver of customs duty and value added tax (VAT) on import of energy materials for a year to address the global crisis.

Moreover, the government should ensure efficient use of energy instead of hiking gas prices, so the natural resources are utilised properly, the letter read.

For instance, the government should reduce the system loss by snapping the illegal and loose gas connections and checking metre reading for efficient use of gas in the country.

The government should also fix the gas price by adjusting the sources of gas so the users can purchase it at affordable prices.

Currently, the government distributes gas from three sources: natural gas fields, imported liquified natural gas (LNG) purchased with long-term agreements and LNGs from spot markets.

So, the prices of the gas also vary and many industrial units face difficulties to afford the high-priced gas of different sources.

As a result, the government should adjust the prices of gas of different sources so the industrial units can purchase those at affordable rates.

In the letter, the BGMEA also said the prices of raw materials for garment items have already soared in the local markets because of the fresh gas price hike, because of which the production cost has also gone high.

It would be difficult to stay competitive in global business because of the unusual price hike of gas in the domestic markets, the letter said.

The price hike of gas will also affect the inflation level in the local markets as the bank loan interest rate will also rise.

The workers will be facing the severe impacts of the price hike of the essentials and there is a possibility of a worker unrest to take place in the country, the BGMEA said.

The law and order situation may deteriorate following such price hike and suffering of the workers, the letter said.

On January 18, the government raised the retail price of gas by 14.5 per cent to 178.9 per cent for industries, power plants and commercial establishments, who together account for 78 per cent of gas use in Bangladesh, as it looks to lessen its unsustainable subsidy burden amid a narrow fiscal space.

From next month, the price of gas used for power generation will be Tk 14 for each cubic meter, up 178.9 per cent from the existing rate, as per the gazette notification from the ministry of power, energy and mineral resources.

That would be a 150 per cent hike for large industries, 154.7 per cent for medium industries and 178.3 per cent for small and cottage industries.

For captive power plants, it would be an increase of 87.5 per cent.

Commercial establishments like hotels and restaurants will have to pay at Tk 30.5 per unit, up 14.5 per cent from the existing rate.

The tariff for households, fertiliser production, CNG-run vehicles and tea gardens will remain unchanged.