Originally posted in The Business Standard on 30 January 2023
The latest gas price hike was irrational for small and medium enterprises (SMEs) as they are struggling to survive. The energy price hike will pushed them come to street.
Gas price for captive plants might be reversed as they have louder voice and this is quite usual that everyone has the right to negotiate. Here SMEs have little or nothing to do.
When it comes to employment, we often refer to industrial employment. But we do not talk about how many of the captive power using companies employ 20,000-30,000 people each.
In fact, 89% of industrial workforce are employed in SMEs. SMEs exist in individual houses. They are employing the larger population and staying out of sight.
They do not have a collective voice, they are not in a position to bargain with government or regulatory authorities including National Board of Revenue. This is why they often fall victim to government policy steps.
During Covid-19 the government provided the businesses with stimulus packages, but very few SMEs were benefited.
To give them relief from unwanted consequences, we should revise the definition of SMEs with categorising small and medium businesses separately.
Major trade bodies are speaking of the issue year after year, but things remain the same for reasons unknown to us.
If proper definition could be worked out, SMEs could have its due focus in the government’s new industrial policy. And it is still possible if the government considers.
Now a storm is waiting for us due to energy price hike.
To minimise the shocks, we need to reduce dependence on costly import of electricity.
We need to go beyond short-term policy to overcome any crisis.
When we talk about any long term project or policy that may take 15 years, we hear that this is too long for a government that remains in office for 5 years only.
We should think beyond the 5-year tenure if we think of long-term solutions to energy problems.
By hiking energy prices, the government is adding to the cost of business, which will ultimately create further inflationary pressure while people’s purchasing power is declining.
The government should form a working committee incorporating economists and business leaders to derive constructive suggestions to overcome this situation.
For energy generation we should focus on coal-based electricity generation, since renewable energy will increase overall energy cost.
We are among the less carbon-emitting countries and still have scope to increase coal consumption.
Bangladesh is a more responsible country in terms of carbon emission; those countries that are responsible for high emissions are now advising us to go green.
Our carbon emission is 0.6%, below the permissible threshold of 1%, according to COP26 negotiation.
We have the scope to generate another 20,000 megawatts from coal.
We need to go for it to reduce cost of production and step towards mass industrialisation.
When European countries like Germany and France are returning to coal-based electricity, why not Bangladesh. We need electricity at affordable price to become a middle income country. If we cannot uplift lower income people into middle income group, how will we be a middle income country?
Considering all these aspects, 2023 will be an experimental year for us. If we succeed, we will be able to address challenges of 2024, which will be the year of recovery.