32.8pc price hike of gas enacted despite opposition

Bangladesh’s energy authority on Sunday increased gas price by 32.8 per cent on an average for all consumers disregarding opposition from all sections of people.

“The order of the commission will take effect from July 1,” Bangladesh Energy Regulatory Commission (BERC) chairman Monowar Islam announced at a press conference at its office in Dhaka.

Three other members of the commission accompanied the chairman during the press conference.

They said that the price had to be increased as country’s gas generation, distribution and transmission companies called for it because of a rise in gas production price due to importing liquefied natural gas.

The price of per cubic metre of gas has been increased to Tk 9.80 from existing Tk 7.38 to make up for an estimated deficit of Tk 1,830 crore in fiscal 2019-20, they said.

They added that 46 per cent of the deficit, which is Tk 8,620 crore, would be met with the increased price.

The government would subsidise Tk 7,690 crore, 41 per cent of the deficit, while Tk 2,420 crore, 13 per cent of the deficit, would come from energy security fund, they informed.

The decision will directly affect 43.10 lakh consumers of gas companies, including 42.81 household connections.

Energy experts and activists described the BERC decision as ‘illegal’ and ‘arbitrary’.

They said that the price hike could have been avoided or kept at a tolerable level had the government not adopted wrong energy policy only to the benefit of it and a section of businessmen.

With the new price in effect, people using a single burner would now pay Tk 925 per month from July, a 23 per cent rise on previous price of Tk 750.

A double burner user would be paying Tk 975 per month, a 22 per cent rise from previous price of Tk 800.

Metered household consumers would be paying Tk 12.60 for consuming per cubic metre of gas in place of previous price of Tk 9.10, a 38 per cent increase.

With regard to gas prices increased by sector, fertiliser sector would have to pay Tk 4.45 for consuming per cubic metre of gas, a staggering 65 per cent increase from previous price of Tk 2.17.

The price for commercial use of gas has been increased by 35 per cent with the new price set for consuming per cubic metre of gas by hotel and restaurants at Tk 23.

Price for gas-powered power plant was increased by 41 per cent to Tk 4.45 per cubic metre from previous Tk 3.16.

For captive power plants using gas, the price was increased by 44 per cent to Tk 13.85 per cubic metre from previous Tk 9.62.

A similar rate of 44 per cent increase in price was made for tea industry. Now the industry would have to pay Tk 10.70 for consuming per cubic metre of gas.

For industrial sector the gas price was increased by 38 per cent to Tk 10.70 per cubic metre from previous Tk 7.76.

The price for CNG has been increased by 7.5 per cent to Tk 43 per cubic metre from existing Tk 32.

M Shamsul Alam, energy adviser, Consumers Association of Bangladesh, said that the gas price was increased arbitrarily and it would increase government’s deficit.

He found the decision to make the highest increase in price for fertiliser sector unwise for it would increase the government’s agriculture subsidy.

He said that it would increase farmers’ production cost. Farmers were already finding their production cost very high compared to the prices they get for their produces in the market.

‘This is injustice,’ said Shamsul Alam.

He said that the deficit the BERC was referring to could largely be met just by checking corruption in gas companies where system loss stands at 10 per cent of the production cost.

The announcement to increase gas price came more than three and a half months after the BERC had a public hearing on it.

Cross sections of people, including industrialists, small businessmen and CNG businessmen, argued against the move to increase gas price fearing that it would put many of them out of businesses.

The BERC had promised a logical and neutral evaluation of the matter.

Anu Muhammad, member secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, described the price hike as ‘illogical’, ‘unethical’ and ‘illegal’.

He said that mere 10 per cent of the investment the government was making in importing LNG would have explored natural gas reserve enough to meet country’s demand.

‘The LNG import was completely unnecessary. The government is making people pay for its corruption and ill-motivated policy,’ said Anu Muhammad.

He also described BERC as an instrument of the government for staging a farce because it follows only government instructions.

Energy experts in many public hearings blasted BERC for trying to justify the government’s move to import LNG showing a depleting gas reserve.

Energy experts never accepted the government’s version and called for more gas exploratory activities.

The BERC increased gas price by 22.70 per cent in February 2017, the seventh increase in gas price in last 10 years.

When journalists asked the BERC chairman Monowar Islam on Sunday for a deadline before the next increase in gas price comes, he could not give any.

‘We can’t tell. We are bound by the law to consider gas companies’ price hike proposals,’ said Monowar.

The BERC on Sunday cancelled minimum charge for gas consumption.

According to BERC, the country imported 650 mmcf LNG till June, which was expected to rise to 850 mmcf soon.

In the fiscal 2019-20, consumption of gas was estimated at 3412 mmcfd. Of the demand, 2562 mmcfd would be met with domestic gas supply and 850 mmcfd with imported LNG.

The government has the plan to increase the import to 4,000 mmcf over next couple of years.

Protesting the gas price hike, main opposition Bangladesh Nationalist Party, Communist Party of Bangladesh, Workers Party of Bangladesh, Socialist Party of Bangladesh, Ganasamhati Andolan and Passenger Welfare Association of Bangladesh in separate statements demanded immediate withdrawal of the decision.

The BNP said it would wage tough street movement if the government does not back away from hiking the price.

The SPB and Ganasamhati Andolan announced separate demonstrations in front of National Press Club Monday afternoon protesting against the BERC’s decision.

Kamruzzaman