Proposed gas price hike worries FBCCI
The leaders of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) have expressed their concern over the proposed gas price hike, which, according to them, will have a detrimental effect on investment and industrialisation.
The hike will hinder the overall growth capacity of the country's economy, the apex trade body said in a statement yesterday.
Bangladesh Energy Regulatory Commission has been working on the proposed hike of 130 percent in gas prices for captive power plants and different rates for other sectors.
The 130 percent rise will increase the price of per cubic metre gas to Tk 19.26 from Tk 8.36 now for captive power plants, according to industry insiders.
“Increasing the price of gas is not a solution,” FBCCI said. It is necessary to encourage the entrepreneurs to establish power-based industrial units instead of gas-based factories, it said.
For the present gas-based industries, it is important to ensure a continuous supply of gas and a stable price policy.
In September 2015, the price of per cubic metre gas was raised to Tk 8.36 from Tk 4.36 for captive power generation.
The FBCCI said 74 percent of the country's energy requirements are met through natural gas and the hike in gas prices will increase the costs of investment, production and overall business activities.
The current pace of growth is necessary for Bangladesh to become a middle-income country by 2021, and the country also needs to prioritise the economic value addition, employment generation and resource utilisation. The business community has been working to enhance the industrial sector's contribution to GDP to 37 percent by 2021 from the current 31.54 percent, the trade body said.
The FBCCI commended the government's initiatives to develop industrial infrastructure and set up 100 special economic zones.
However, for industrialisation, a major challenge apart from infrastructure development is the sustainability of gas supply and uninterrupted power supply, according to the statement.
Ensuring stable and adequate availability of electricity, water, gas and land is crucial for attracting more investment, it said.
The proposed hike will have other impacts like higher cost of living and a rise in inflation, which will ultimately affect every resident of the country.
Of the total industrial gas consumption, 17 percent is used by the textile and garment sector, the FBCCI said.
Although the textile sector suffered the bad impacts of high gas prices, the textile makers were not able to demand higher prices for their products, which has not only led to a loss of profitability but also hindered the growth prospect of the sector.
The spinning mills use captive power for ensuring uninterrupted power supply.
The price hike will also affect the export-oriented industries, agriculture, steel, fertiliser, independent power producers, real estate and other services sectors.
Apart from that, investors in heavy industries are already facing difficulties in preparing their plans for business growth and investment due to the proposed gas price hike.
Now it is important to identify the other challenges of gas production and efficiency instead of adopting a higher price policy, the FBCCI said.
The problems associated with the gas sector could be solved by effectively addressing the issues of illegal gas connection, system loss and illegal billing activities, it said.
The use of captive power will decrease if gas consumption by industries, the power sector and households increases, the trade body said.