The Financial Express

The gas tariff hike fallout              

| Updated: July 08, 2019 22:04:22

The gas tariff hike fallout                

The fact that the fallout of the latest hike in gas prices would be more or less all-encompassing remains uncontested. Only the men who favoured the hike are considering it to be 'not a big deal'. But that does not anyway change the situation on the ground. A case in point is the estimated hike in the cost of production of gas-based power generation. A report published in this paper late last week said the annual expenditure on account of purchase of gas by the relevant power plants would soar to around Tk137 billion from the previous Tk.98 billion following the latest 48 per cent hike in tariff of gas used by power plants.

The gas tariff has been raised at least on seven occasions during last eight years under different pretexts. This time the import of expensive liquefied natural gas (LNG) to help narrow the supply deficit is being cited as the prime cause. But the hike being too large has stirred up grave concern among all sections of consumers, including the manufacturing units. Opposition from consumers' rights groups and businesses could halt the government decision on gas price hike for the past few months, but the biggest-ever hike---32.8 per cent, finally, came on the first day of the new financial year, 2019-20.

Undeniably, the latest increase in gas tariff would create an additional pressure on the price situation because of the chain-effect of the move. Already, the prices of a few commodities have gone up in the market and a few more are likely to follow suit. The transport operators and the Bangladesh Power Development (BPDB) are yet to unveil their plan to raise charges and tariffs. It seems, they are buying time and allowing the consumers' anger over gas tariff hike to subside gradually. After some time, they too would come up with announcements relating to hike in transport fares and power tariff. The BPDB is already burdened with heavy losses on account of the purchase of power from private rental plants and it would not be possible on its part to bear the additional generation cost due to gas tariff hike.

There is a growing fear that the developments following the substantial hike in gas tariff would stoke up inflation which has been on an upward curve in recent months. The government could have raised the gas tariff at a lower rate had it been really attentive to rectify some of its failures in the energy sector. At the top of its alleged failures remains the rampant pilferage of piped gas. Despite media reports on the existence of thousands of unauthorised gas connections and tampering of gas meters by many industries in connivance with the employees of gas distribution companies, nothing tangible has been done to correct the situation. It is thus high time the government took a few effective measures to stop widespread gas pilferage and make a dispassionate review of the possible impact of the latest gas price hike on production, investment and price situation.

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