No logic behind hiking gas tariff

The demand made by the Consumer Association of Bangladesh (CAB) for suspension of the scheduled public hearing on the proposed gas tariff rise on Wednesday is sure to enjoy popular support. Essentially, the rights group is against any further hike in gas tariff. However, its argument that the move to increase tariff for new industries, extended units of existing ones and new captive power plants is not in conformity with the spirit of the July-August uprising may not hold much water. Economic reality hardly respects considerations other than sound reasoning based on available constituents in a given situation. Of course, a search for cheaper alternative to the proposed measure can be a viable option. One of the CAB's demands stands out for its logical argument. It has suggested slashing of tariffs and subsidy by arresting illegal and illogical spending.

There is no need to go for drastic measures like the ones US President Donald Trump has opted for cutting US federal spending but economising on different areas of the energy sector can make quite a difference. Pilferage through illegal connection of gas and the alleged tampering with gas meters at some industrial units are some of the areas that need addressing immediately. The problem has its origin in the overdependence on imported gas and fuel oils to the misuse of gas obtained in the country's wells and reluctance to further explore this cheap source of domestic energy onshore and offshore. Apart from the Sylhet region where from gas has been extracted to its near depletion, the Chittagong Hill Tracts, a part of the eastern fold belt of the Bengal Basin thought to be potentially rich in hydrocarbon were totally ignored. One of the reasons was the challenging nature of the exploration there. But drilling of four wells at the Sitakund structure by the Indian Prospecting Company between 1908 and 1914 at the maximum depth of 1047 metres reportedly found presence of oil and gas there.

When crony capitalism rules the roost, there is an easy option for economic measures in the interests of the few instead of the larger benefit of the country. The nation is now paying heavily for dependence on imported liquefied natural gas, liquid oil and coal. Under the dubious arrangement of power generation by quick rental power plants indemnified by the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, billions of Taka were embezzled and wasted in the name of capacity charge. This money was added to the cost and hence the rise in gas and power tariff.

With the scrapping of the indemnity energy law, the extra cost on account of misuse, irregularity and capacity payment is no more involved. The government is no longer bound to supply gas to those quick rental power plants and pay even if they do not generate power and supply the same to the national grid. But making the gas costlier, as proposed, by 152.40 per cent for new industries and extended units of existing ones and 141.96 per cent for new captive power plants, will act as a serious disincentive to the country's industrial base. Notably, captive power plants are installed by power-intensive industries where continuity and quality of power supply are crucial. If gas supplied to industries becomes outrageously costly, operation of many manufacturing plants will be uneconomical or the extra costs will be passed onto the consumers, adding to their woes. The move may prove counterproductive.