4 trade bodies demand suspension of gas price hike for industrial, captive power plants
They also emphasised the need to address the ongoing gas crisis in the industrial sector through urgent measures, such as supplying gas to factories via cylinders from CNG refueling stations
Leading business leaders have urged the government to suspend the proposed gas price hike for the industrial sector and captive power plants, and called for a competitive and sustainable gas pricing policy developed in consultation with relevant stakeholders.
In a letter to Energy Adviser Muhammad Fouzul Kabir Khan on Monday (27 January), four major trade associations raised concern over the proposed gas price hike and urged him to reconsider the decision.
The business leaders said urgent steps should be taken to address the ongoing gas crisis, suggesting measures such as supplying gas to factories through cylinders sourced from CNG stations.
Keep updated, follow The Business Standard's Google news channel
Besides, they emphasised the need for a medium- and long-term strategy, along with a time-bound action plan, to ensure uninterrupted gas supply and overall fuel security.
The leaders expressed their willingness to discuss these recommendations with the government in detail and to provide any further information necessary in the interest of the industry and the economy.
Signatories of the letter include Mohammad Hatem, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA); Showkat Aziz Russell, president of Bangladesh Textile Mills Association (BTMA).
The letter was also signed by Hossain Mehmood, chairman of the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA); and Md Anwar Hossain, administrator of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Petrobangla recently submitted a proposal to the energy regulator to more than double the per-unit price of gas for industrial and captive consumers - from Tk30 and Tk 31.50 to Tk75.72.
Concerns over gas price hike
The letter raised alarm over the government's plan to increase gas prices in the industrial sector by 150%, potentially raising the rate to Tk75 per cubic meter. The business leaders cautioned that such a steep hike would have severe and lasting negative impacts on industrial growth and the economy.
They noted that factories are already grappling with inadequate gas pressure, leading to significant production losses. In key industrial hubs such as Gazipur, Mymensingh, Narayanganj, and Savar, production has declined by 50-60% due to gas shortages.
These disruptions have caused delays in raw material supplies, missed lead times, and financial losses, damaging the trust of international buyers and jeopardising exports, it said.
The letter also pointed out that a similar 150% gas price hike in January 2023 failed to deliver the promised benefits of uninterrupted supply, leaving industries in the same precarious situation.
Highlighting stagnation in investment, the letter cited central bank data showing an 8.95% decline in garment industry capital equipment imports and an 18.11% drop during July-November of the current fiscal.
The business leaders warned that another gas price hike would heighten the slowdown, threatening existing mills and factories at a time when increased investment in backward linkages is critical for Bangladesh's transition to a middle-income country.
BKMEA President Hatem told The Business Standard that businesses are grappling with severe challenges due to insufficient gas supply and high prices.
He warned that any further price hikes would be catastrophic, deterring new investments and stalling job creation.
Hatem also noted that disruptions in law and order have exacerbated these issues, severely hindering industrial activity and economic growth.
Calls for policy reforms
BTMA President Showkat Aziz Russell told TBS that businesses are facing challenges due to a lack of government-stakeholder coordination.
He urged the government to consult business leaders before making policy decisions to avoid negative impacts on the economy and business confidence.
Russell also highlighted that yarn imports from India have grown by about 45% in a year due to government policy changes - an alarming trend for the local textile and spinning industry.
He urged the government to investigate why utility charges in Bangladesh remain disproportionately high and called for policy support to alleviate these costs.
"The previous government allocated subsidies to power plants without ensuring adequate power production," Russell stated. "Such subsidies should instead be redirected toward activities that stimulate economic growth and generate employment."
