Gas tariff hike dampener for new investors

Just days after the investment summit was held where investors from home and abroad were welcomed by the interim government  with open arms, the country's energy regulator in a paradoxical move reportedly hiked up gas price for new industrial and captive power plant connections by 33 per cent. However, for older industries with existing (gas) connections, unless they are going to increase their consumption exceeding the allocated load, for instance, moving to further expand their business activities, the older rate of tariff will apply.  Similarly, existing consumers including power plants, fertilizer factories, CNG filling  stations, tea estates, etc., will pay tariff according to the pre-hike rate .  Now, one wonders, how can new investments take place, if   fuel (gas) price is increased in such an arbitrary fashion? Unsurprisingly, the new arrangement for gas price has drawn flak from both industries and consumer rights bodies alike since the measure is clearly discriminatory for new industries as well as the existing ones planning to expand their business activities. It may be recalled that around two months before this latest round of gas price increase, Bangladesh Energy Regulatory Commission (BERC) had convened a public hearing on a gas price hike proposal that argued in favour of reducing  the deficit of government-owned companies like Petrobangla. As expected, representatives of industries, consumer rights activists and others who attended the hearing were at one  in criticising the regulators' proposal as it harks back to the bygone era of autocracy when gas and power prices were increased arbitrarily.

Notably, before this gas price hike by the interim government, the last time it happened was during autocracy in 2023, when  the gas price for industries was nearly doubled from Tk16 per unit to Tk30. No doubt, the energy policy of the autocratic government of that time was a flawed one as it was based on LNG import. Now the question is if the incumbent interim government is also following that old policy rejected by the people! Interestingly, the head of the BERC reportedly held the view that the  fresh gas tariff hike was tolerable  for new industries and captive power units since the state-run gas and energy companies were demanding a 150 per cent increase. It's indeed a strange logic as it defies the general consumers' interest.  Protection of that interest is the responsibility of the energy regulator--- a statutory body. The BERC chief's observation that the gas tariff hike would create the opportunity to look for alternative energy sources like Liquefied Petroleum Gas (LPG) and solar power for future industries was, if anything, rather tentative.

But whatever decisions policymakers might make on as serious an issue as pricing of fuels for industries, it has to be carefully considered and planned. There is no scope for experiment here. In truth, the energy regulator needs to devise its fuel pricing policy with an eye to serving the interests of its consumers, especially industries more than that of the state-run companies including Petrobangla. In the final analysis,  these state-run companies, too, are to  serve the interest of the consumers and not make profit. The interim government needs to think out of the box while devising its energy policy. It must avoid falling in the old trap of imported LNG. On the contrary, it should stress developing the existing and proven reserves of gas as well as explore new wells. There is no short-cut to resolving our energy issue.