Holiday Report Gas price hike by 32.80 percent hit the nation no sooner the new budget for 2019-20 comes into effect on July 1. The announcement by the government said households will have to pay Tk 175 more for gas from this month. The move has been justified saying it would help the government bear the expenses of importing liquefied natural gas (LNG) but analysts say the effect will be too big on households, commercial users and industries. According to the new rates, households using a single burner will pay Tk 925 instead of Tk 750 a month. Those using a double burner will pay Tk 975 in place of Tk 800. With this, gas tariff for households has more than doubled in the last decade. Gas price was last hiked in June 2017. The new rates raised gas tariff for power plants 40.82 percent, for fertiliser factories 64.21 percent, for CNG users 7.5 percent, for captive power plants 43.97 percent, for industries 37.89 percent, for tea estates 44.20 percent, for commercial users 34.98 percent, and for households using burners on metres 38.46 percent. The weighted average gas tariff for all users, including households, industries and businesses, will rise by 32.8 percent. Chairman of Bangladesh Energy Regulatory Commission (BERC) Monowar Islam announced the price hike at his office in the capital last week. He said the move would help the government bear the expenses of LNG import. The government is spending about Tk 35 for per cubic metre of imported LNG, while the cost of locally produced gas is only about Tk 5, the BERC chairman said. Bangladesh started importing LNG from August last year to alleviate energy shortage, largely caused by the depletion of domestic reserves, no new discoveries and rising demand. Consumer rights groups and several political parties slammed the hike, saying the general public would suffer due to the increase in gas prices. Energy adviser to Consumers Association of Bangladesh (CAB) M Shamsul Alam said the price hike would push up costs of electricity and fertiliser production igniting a spiraling of utility price hike soon. The hike comes several months after state-run Petrobangla and its distribution companies demanded that the BERC raise the gas prices to Tk 12.19 per cubic metre. In January, all six gas distribution companies — Titas, Bakhrabad, Jalalabad, Pashchimanchal, Karnaphuli, and Sundarban – had proposed the price hike. They argued that their production cost has increased following the blending of LNG with locally produced gas. The price of blended gas stands at Tk 12.60 per cubic metre. BERC said the revenue requirement for the distributors will be Tk 43,840 crore in fiscal 2019-20. If the price remained unchanged, they would face a deficit of Tk 18,730 crore. BERC sources said gas tariff has been fixed assuming that 850 million cubic feet (mmcf) of gas would come from LNG and 2,500 mmcf from local sources every day. At present, two floating storage and re-gasification units, respectively owned by Summit LNG of Bangladesh and Excelerate Energy of the USA, are supplying 650 mmcf a day. Earlier at public hearing in March, experts, consumer right groups, industrialists, trade bodies and left-leaning politicians also slammed the proposal from the distribution companies. They opposed the rise saying it will be unaffordable to people. But it appears that the BERC altogether ignored the opinion of stakeholders and towed the government desire at the cost of the common people interest. Economists fear rising cost of production will now affect every segment of the economy and business.
