RMG makers worried over move on power tariff hike

Textile and apparel industry owners have expressed concerns as the Bangladesh Energy Regulatory Commission (Berc) is holding a day-long public hearing on the 65.95% bulk electricity price hike proposal on Wednesday.

They are worried that the electricity price hike amid an economic struggle would put industries under added pressure and such a decision would not be wise.

In a statement, the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) said the electricity price hike in the current context would be considered a suicidal move by the government.

"Bulk electricity price hike will have a multifaceted negative effect on the agriculture, service and manufacturing sectors. Even the ongoing trend of economic development will also be severely affected," it reads.

The trade body requested the government not to accept the proposal to increase the price of electricity.

Meanwhile, Kutubuddin Ahmed, chairman of Envoy Textile, said, "If the government takes any such decision that will create another challenge for the industries."

He explained that when the global apparel market is going to stabilise, the Russia-Ukraine war has put all under big inflation pressure.

"If this war prolongs for a few months, it would adversely affect our main export destination – the European market," Kutubuddin Ahmed added.

He said, "The prices of every raw material and the freight cost have already increased many folds but buyers are not ready to pay for that as their consumers are also not ready to pay an extra penny. Due to inflation pressure, buyers are under economic contractions and none of them is ready to expand for clothing or any luxury items."

Earlier on 12 January, the Bangladesh Power Development Board (BPDB), the single buyer of electricity, submitted the bulk electricity price hike proposal to the Berc.

As per the latest tariff order, the bulk price of per unit electricity is Tk5.17. But the BPDB proposed to Berc for increasing the price to Tk8.58 per unit.

In the proposal, it said due to lesser gas supply to the power plants and the price hike of the liquid fuel in the global market, the electricity production cost has reportedly increased.

Therefore, BPDB will face a huge deficit in the bulk electricity purchase and sale unless the bulk price is increased considering the production cost.

Earlier in March, Berc held a four-day public hearing on 117% gas price hike proposals which are now in the process to be announced.

The Bangladesh Textile Mills Association (BTMA) and other stakeholders have strongly opposed any increase in gas tariff considering the current scenario of the textile and other sectors to sustain their competitiveness.

In a statement issued on Tuesday, Monsoor Ahmed, chief executive officer (CEO) in charge at BTMA, said the association has learned that the finance ministry under the initiative of the finance secretary has decided to increase captive power's gas tariff per cubic metre to Tk28 from Tk13.85cm at present.

He said the textile industry particularly the spinning is in severe problem due to a crisis of containers for importing cotton since the cotton price has increased from .95 cents in May 2021 to 1.80 cents in May 2022.

"In such a situation, an increase in captive power's gas tariff to Tk28 will increase the unit cost (per kg yarn) to .50 cents resulting in a huge rise in production cost and will allow entry of unauthorised yarn, an increase in import, finally crippling the textile industry," he added.

He said, "BTMA is trying to raise the issue with the authorities concerned to fix a reasonable increase in gas tariff to sustain the textile industry. We request all of the distinguished brothers and sisters to focus on the issue in their dailys."

Md Shahid Alam, director at Shah Fatehullah Textile Mills Ltd, said the cost of production of goods in the country has already increased due to high shipping costs, the Russia-Ukraine war, and the rising dollar including the rising raw material prices.

"In such a situation, if the price of gas doubles, the cost of production will increase many folds. This will lead to a fall in sales of goods at home and abroad, the failure of our products in international competition, and destroy our industrial sector," he said.

"Due to a bureaucratic wrong decision, our jute industry was destroyed before. And now our entire industrial sector is going to be destroyed in the same way, our economy will fall on its face," he added.