By Rokeya Zaman
Gas and power tariffs might see a rise where fuel price may be remained same as the sources close to Prime Minister’s Office disclose to ICE Business Times.
The sources also said that the reason behind the recent bid to raise the gas and power tariff is to make power distribution and marketing companies self-sufficient in terms of funding to help them keep up electricity generation, transmission and distribution where the difference between the power generation cost and the retail price of power is Tk 1.5-Tk 2 a unit. I is also likely to raise gas tariffs to prevent wastage in the sector. The sources said that Bangladesh Energy Regulatory Commission (BERC) has applied for raising those tariff.
According to the official statistics, the country’s electricity generation capacity is 11,532 MW with an average daily generation standing at 7,500 MW and the demand for electricity is rising by 10% annually . The Government last raised the gas tariff in 2009 and in the last six years, only CNG prices were increased twice in 2011, while retail power tariff was last increased in March, 2014. In January 2013, the government increased the price of diesel and Kerosene by Tk 7 a liter and that of octane and petrol by Tk 5 a liter to reduce its subsidy burden.
The exporters of Bangladesh expressed deep concern over the proposed price hikes of gas and electricity which in turn increase the production cost and erode competiveness, said analyst. Meanwhile it has been found that due to a host of reasons, the export trends in RMG have witnessed a negative growth, which never happened in last one decade. The rise of power and energy cost will again rise the production cost of exportable goods. President of EAB Abdus Salam Murshedy said this kind of decision would create a bad impact on our exportable items as we were falling in a deep challenge. This year, we started with a negative growth but showing a trends of sigh of relief since last five months where there is no political conflicts in the country; nevertheless we are in a stage of deepening crisis.
He also added that government has gave many kind of policy supports and incentives in the budget for export sectors but oil price was 118 $ per barrel which come down to 39 $ per barrel where our Government is decided to rise the energy price. “The price hike will raise our cost and expenses on account of electricity, oil and others and then unit cost will shot up and we will lost our competitive edge.”
He said that competing countries like China , India , Vietnam , the Philippines , Cambodia , Indonesia and Malaysia has cut down their fuel prices where we are in a bid to raise it They are achieving double digit growth but we are struggling with the challenges and the whole economy, not only the export sector will suffer and it will create a spur of inflations.
Apart from the interest of the exporters, the consumers will be suffered by the upward adjustment of energy price. The reason behind is that Bangladesh Power Development Board (BPDP) is incurring substantial losses and has been purchasing fuel oil based rental power plants. But it is also true that domestic gas tariff is much lower than many other countries but they are doing profits. So the 50% jump in gas burner is does not holds water where transport owners have made instant demands raise fares following the increase in tariff of compressed natural gas(CNG). Similarly, the cost of production in industries that use gas for power generation in their captive plants would go up because of 100 % hike in gas tariff. This will surely discourage private sector investment which has also remained almost stagnant for the past few years. Last but not the least, the hikes have all the potential to stroke up inflation which has an upward curve.
