Finding a solution to industrial gas tariff disputes

The recent move of the Bangladesh Energy Regulatory Commission (BERC) to raise gas tariffs for industrial and captive power users in line with the LNG import price for new connections and consumption in addition to authorized volume has drawn a strong reaction from the business community. And that is not unusual because of the fact that the previous autocratic regime in January 2023 had raised gas tariffs by 150 per cent with the assurance that gas supply to the industries would remain uninterrupted. In reality, the promise was never materialised. Small wonder that the industries suffered enormously for want of uninterrupted energy (gas fuel) supply affecting production in all industrial sectors dependent on gas. Then came the July-August's political change through a popular uprising. Against this backdrop, the industries naturally kept their fingers crossed that with the political changeover, their longstanding issues would be finally addressed to the satisfaction of all stakeholders concerned.

 Evidently, the BERC's proposal of another round of gas tariff hikes has been a cause for widespread concern among the business community provoking a strong protest from it. In this connection, 14 industry leaders, as reported, jointly lodged their strong protest through a letter to the energy regulator. They have demanded the scrapping of the entire proposal which they described  as discriminatory. It is so because, once the gas price hike proposal is implemented, the entities having new gas connections would have to pay 2.5 times more than those with old gas connections. And, if the BERC's proposal for a gas price hike is implemented, the industry leaders have warned that it would seriously impact the country's industrial development, foreign direct investment (FDI), local investment, employment and so on.

Needless to say, the issue calls for urgent attention and a prompt response from the energy regulator, BERC, or even from the highest levels of the administration, since the interests of top foreign exchange-earning industries, other vital private sector enterprises, and SMEs-which create jobs and sustain entrepreneurial activities across the nation-are at stake.

What is noteworthy here is that along with the protest letter, the industry leaders also came up with alternative suggestions of reducing the gas price to a maximum of Tk.24.39 per cubic metre based on the blended cost of imported LNG and local natural gas.

In that case, one would be required to take into consideration the fact that the local supply of gas has been shrinking when both household and industrial demands have been on the rise. The efforts so far to explore new gas fields or develop the existing ones have not been up to the expected level. But as there cannot be any answer to the present needs of the industries, the authorities concerned would be required to deal with the issue with urgency and find a way out of the predicament facing the industries. 

The energy regulator would do well to keep in mind that no stopgap measure is going to resolve the gas price issue. A prudent policy in this context is expected from the government to ensure an uninterrupted and stable gas supply at a rational price to protect the manufacturing sector, the heart of the nation's economy.