Hiking gas, electricity prices will be suicidal: FBCCI
- BERC recommended raising gas price by 58% at wholesale level
- BPDB has proposed to increase the wholesale electricity tariff by 66%
- Business leaders fear:
This will trigger multidimensional inflation
Hinder the continuous flow of development
Exports will drop, industries will suffer
Pressure on foreign exchange reserves will mount
the livelihoods of the masses will be affected
- Some called it a plot against the government
Rising electricity and gas prices would further increase the cost of doing business and make it impossible to maintain competitiveness, said Md Jashim Uddin, Chairman of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) .
“Such a decision at this stage will be a suicidal decision for the government,” he said on Saturday.
An increase in electricity and energy tariffs would create a negative reaction by triggering multidimensional inflation, which would block the lives and livelihoods of the popular masses and seriously impede the ongoing flow of development, he said. seen at a press conference held at the Bhaban Federation at the capital’s Motijheel on Saturday.
The FBCCI chief speculated whether the price hike proposals were made to force the government into an uncomfortable situation.
Top business leaders, present at the event, called it a “conspiracy”, with some speculating there might be an international conspiracy behind it.
Last week, the Bangladesh Energy Regulatory Commission (BERC) recommended raising gas prices by around 58% at the wholesale level. Separately, a recommendation was made to raise the price of gas used in captive power by 132%, business leaders said.
The recommendations were made during a day-long public hearing on the Bangladesh Power Development Board’s (BPDB) proposal to increase wholesale electricity tariffs by 66%.
If the current crisis caused by the Russian-Ukrainian war persists, only then can measures be taken to increase prices to remedy the imbalance, said the president of the FBCCI at the event, organized to take a position on the recommendations increase in BERC prices.
He added that companies are burdened with the huge expenditure incurred in power generation, which now exceeds the actual demand.
Currently, the electricity generation capacity is 22,000 MW while the demand is 14,000 MW.
Private industries should not bear the brunt of irregularities and mismanagement in the electricity sector, he added.
BERC recommendations will be finalized within 90 business days, during which time it is possible to revise the recommendations.
Demanding the closure of power plants in quick lease, the FBCCI chairman said that 70% of power plants are idle which, including capacity and demand loads, continues to harm the national interest.
He suggested power rationing through 1-2 hour load shedding in non-industrial sectors.
Demanding an increase in coal-fired power plants, he said it was relatively profitable.
FBCCI executives said oil-fired power plants are increasingly being used, despite nearly a thousand megawatts of gas-fired power plants sitting idle. The industry cannot bear this loss due to poor planning.
The apex trade body demanded an urgent reform of the overall management of the electricity and energy sector, the urgent elimination of all irregularities, waste, illegal connections, the reduction of costs by stopping production surplus by supplying 30% of reserve electricity compared to the electricity used, the cessation of payments to lazy producers, the repeal of VAT, tariffs and taxes on the energy sector and the adjustment additional expenses through government grants.
National Association of Small Scale and Artisanals of Bangladesh (NASCIB) President Mirza Nurul Ghani said, “There is a conspiracy behind such proposals. The decision in this matter must be political and not bureaucratic.
The RMG manufacturers concerned
Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon, presenting various data, asked, “Why do Titas and Petrobangla want to raise prices when we (industry sector) are profiting from it?”
He said: “Titas made a profit of Tk 1,564 crore from gas used by industrialists in three years. Petrobangla, which owns 75% of the gas, made a net profit of Tk 549 crore, of which 65% came from from us. Even after that, they still raise the prices on us.”
“The Gas Development Fund took Tk 5,000 crore from us,” he said and added, “If you take that money into account, it is possible to reduce the price, not increase it.”
Echoing a similar stance, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Shahidullah Azim said it would be unwise for authorities to rush to make a decision on the price increase.
“Exports will decrease if the proposals are accepted. In addition, pressure on foreign exchange reserves will increase,” he said.
Mohammad Hatem, executive chairman of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said if such a decision comes into effect, the industry will shut down automatically, no one will have to.