Kazi Zahidul Hasan :
Experts and business leaders on Monday opposed the latest hike in gas tariff saying that it will be a heavy toll on the manufacturing units, which are heavily dependent on gas, to run their production.
Terming the hike irrational, they also said that it will create a massive pressure on all economic sectors and consumers.
“The rise in gas tariff will increase production cost of the export-oriented industries pushing them into a tougher competition in the global market,” Abdus Salam Murshedy, President of the Exporters Association of Bangladesh (EAB) told The New Nation.
He said, production at export-oriented industries, especially apparel units, will be unsustainable due to increase in gas tariff for the industrial and captive power clients. “This could adversely impact on the country’s export.”
“The rise in gas tariff is ‘irrational’ when the state-owned gas distribution and marketing companies are making hefty profit,” said Murshedy, a ruling party lawmaker, adding that the government should keep out the export sector under the preview of gas tariff hike.
Bangladesh Energy Regulatory Commission (BERC) on Sunday increased gas price by 32.8 per cent on an average for all consumers despite opposition from every quarters.
“Input costs will go up for the energy-intensive industries that produce fertilizer, textile, garments, cement and steel
following the gas price hike,” Osama Taseer, President of Dhaka Chamber of Commerce and Industry (DCCI) told The New Nation.
“It will also erode competitiveness of local industries,” he added.
The DCCI leader mentioned that the impact of tariff hike will be severe for small and medium enterprises (SMEs), as they are not in a position to bear the additional production cost. “This may led to closure of many SMEs, which accounts for 90 per cent of industrial jobs.
Terming the gas price hike ‘irrational,’ Mohammad Ali Khokon, President of the Bangladesh Textile Mills Association (BTMA), said, textile mills are heavily dependent on gas for captive power generation. The 44 per cent tariff hike of gas for captive power generation will push up their production cost manifold.
“Production at textile units will turn unsustainable as a result of gas price hike,” he opined.
He also feared that many of the mills may face closure failing to sustain from high production cost. Cost of electricity production by captive power generators will increase by Tk 15-18 for a kg of yarn production, which is now Tk 9.62, according to an estimate.
About 430 textile mills out of the 1,500 BTMA members are generating more than 1,300 MW of electricity through gas-run captive power generators to run their production.
“Hike in gas tariff will lead to almost 1.0 per cent increase in production cost of export-oriented apparel units. The increase might not big in terms of percentage, but it will push apparel units to further hardship when they are already bearing the brunt from high production cost,” said Dr. Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
“The industrial sector is under pressure of rising cost of production. So, the fresh gas price hike would have detrimental effects on it,” said Md. Siddiqur Rahman, Vice-President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
He also said that the hike will also slow down private investment and thus affect job creation. Furthermore, the overall economy will face setback following the gas price hike. Terming the gas price hike ‘unethical’ Prof M Shamsul Alam, Energy Adviser of the Consumers Association of Bangladesh (CAB), said, the hike was made arbitrarily which would affect all consumers causing adverse impact on economy.
“We all know that gas price hike will wreck havoc on economy. So, my question is that for whose interest the gas price will be increased.”
Prof M Shamsul Alam further said that the gas price hike will push up cost of transportation, electricity production and thereby lead to rise in commodity prices, pushing up living cost of common man. This would also push up the nation’s inflation rate and thus leave adverse impact on economy.
He also said that the government does not need to hike energy prices in regular intervals if gas and electricity pilferage and corruption are curbed.
