Govt may defer gas price hike to April

The government is likely to defer the enforcement of the newly hiked prices of gas to April instead of February, in a bid to make some breathing room for industries.

"The Prime Minister's Office [PMO] has already decided to defer the gas price hike till March, but we are pushing for delaying it by another month. Once a decision is reached, a formal announcement will be made in this regard," said prime minister's Private Industry and Investment Adviser Salman F Rahman, while talking with Textile sector entrepreneurs at a Dhaka hotel on Thursday evening.

"We have also discussed the security deposit obligated for industrialists. Owners won't have to deposit any additional amount against their gas demand," he said, referring to the security deposits industries usually have to credit against their gas demand.

The Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon, told The Business Standard (TBS), "The prime minister's adviser assured us that the Titas Gas Transmission and Distribution Company Ltd will not demand the additional security money from us. If they charge that money, then every mill owner has to deposit an additional Tk8-10 crore."

"In a meeting at PMO last week, we got a hint that the price hike will be deferred to March," he said, but businessmen argued to delay it further until new liquified natural gas (LNG) cargo arrives.

After an eight-month pause, the government is set to resume importing liquefied natural gas (LNG) from the global spot market at any time now.

"At the same time, business leaders also urged the government to revise the gas tariffs down considering the global economic situation," Mohammad Ali Khokon added.   

The government hiked gas prices on 18 January by a staggering 179%, with an eye on eliminating subsidies and cutting the fiscal deficit. 

With the latest development, the price of gas used for power generation has been increased from Tk5.02 to Tk14 (179% jump) per cubic metre. 

Also, the gas price for captive power plants rose to Tk30 from Tk16 (88% jump). For large industries, the price goes up to Tk30 from Tk11.98 (150% jump).

For medium industries, the new price has been set at Tk30 from Tk11.78 (155% jump). And for hotels, restaurants, and other commercial entities, the new gas price has been hiked to Tk30.50 from the existing Tk26.64 per cubic metre (14%).

The new prices will be effective from 1 February, according to a gazette notification issued by the Ministry of Power, Energy and Mineral Resources on 18 January.

However, gas prices for residential, fertiliser and tea production were not increased. 

According to sources with knowledge of the PMO meeting, the Federation of Chambers of Commerce and Industries (FBCCI) President Jasim Uddin also requested the top government officials to defer the enforcement date of the price hike till April and open new LCs to import LNG within this period." 

Explaining the latest price hike, the Energy Division said the increased gas demand has to be met by importing LNG at a higher price from the spot market. 

Amid the gas crunch at home and repeated appeals by businesses for a smooth supply, the prime minister also told the parliament that entrepreneurs will have to pay the prices at which the government purchases the fuel from global markets if they wish to avail of uninterrupted supply.

"Even the recent 179% tariff hike does not guarantee an interrupted gas supply to industries," said Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry (MCCI).