Hiking gas, power prices will be suicidal: FBCCI

Originally posted in The Business Standard on 21 May 2022

Business leaders term such proposals as ‘conspiracy against the government’

Photo: Collected

Increasing prices of electricity and gas would further increase the cost of doing business and make it impossible to maintain competitiveness, said Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI).

“Such a move at this time will be suicidal decision for the government,” he said on Saturday.

A rise in power and energy tariffs would create a negative reaction by triggering multidimensional inflation, which would stall the lives and livelihoods of the mass people and would seriously impede the ongoing flow of development, he observed at a press conference organised at the Federation Bhaban in 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, termed it as a “conspiracy” with some speculating a possibility of an international plot behind it.

Last week, Bangladesh Energy Regulatory Commission (BERC) recommended increasing electricity prices by some 58% at the wholesale level. Besides, a recommendation has been made to increase the price of gas used in captive power by 132%, said business leaders.

The recommendations were made during a daylong public hearing on the Bangladesh Power Development Board’s (BPDB) proposal to hike bulk electricity tariffs by 66%.

If the ongoing crisis caused by the Russia-Ukraine War persists, only then steps can be taken to increase prices to address the imbalance, the FBCCI president said at the event, organised to declare stance on BERC’s price hike recommendations

He further said that businesses are being burdened with the huge expenses made for power generation, which is now more than the actual demand.

Currently, power generation capacity is 22,000MW while the demand is 14,000MW.

Private industries should not bear the brunt of the irregularities and mismanagement of the power sector, he added.

The BERC’s recommendations will be finalised within 90 working days, by which there is scope for the recommendations to be revised.

Demanding the closure of quick rental power plants, the FBCCI president said that 70% of the power plants are idle, which including capacity and demand charges, continues to harm the national interest.

He suggested power rationing through 1-2 hours load shedding in the non-industrial sectors.

Demanding an increase in coal-fired power plants, he said it is relatively cost-effective.

FBCCI leaders said fuel-fired power plants are increasingly being used, despite the fact that nearly a thousand megawatts of gas-fired power plants are sitting idle. The industry cannot bear this loss due to wrong planning.

The apex trade body demanded urgent reform of the overall management of the power and energy sector, urgent elimination of all irregularities, waste, illegal connections, reduction of costs by stopping excess production by providing 30% reserve electricity than used electricity, stopping payments to lazy producers, the repeal of VAT, tariffs and taxes on the energy sector and the adjustment of additional expenditure through government subsidies.

National Association of Small & Cottage Industries of Bangladesh (NASCIB) President Mirza Nurul Ghani, said, “There is a conspiracy behind such proposals. The decision on the matter must be a political one, not bureaucratic.”

RMG makers concerned

Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon, presenting various data, asked, “Why do Titas and Petrobangla want to hike prices despite being in profit from us (industry sector)?”

He said, “Titas has made a profit of Tk1,564 crore from gas used by industrialists in three years. Petrobangla, which owns 75% of the gas, has taken a net profit of Tk 549 crore, 65% of which came from us. Even after that they are raising prices on us again.”

“The Gas Development Fund has taken 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 & Exporters Association (BGMEA) Vice President Shahidullah Azim said it would not be wise for the authorities to rush to a decision regarding the price hike.

“Exports will decline if the proposals are accepted. Also, pressure on foreign exchange reserves will mount,” he said.

Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said if such a decision goes into effect the industry will shut down automatically, no one will have to do it.