Gas price hike puts manufacturing sector under pressure: BUILD
BUILD warned that the increased cost burden will discourage industrial expansion and investment, just as optimism had begun to grow following the Investment Summit 2025
The recent 33% hike in gas prices for new industrial users and captive power plants will significantly strain Bangladesh's manufacturing sector, according to Business Initiative Leading Development (BUILD), a private sector think tank.
In a press release issued today (16 April), BUILD said the new gas rate—imposed by the Bangladesh Energy Regulatory Commission (BERC) through its order no 2025/06 on 13 April—will aggravate existing cost-push inflation, which is already approaching double digits. Since 2023, gas prices for industries and power generation have surged by 179%.
"This price adjustment comes at a time when many businesses are already struggling with rising raw material costs, a weakening taka, export market volatility, persistent power shortages, energy unreliability, and the imposition of US reciprocal tariffs," the organisation said in the press release.
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BUILD warned that the increased cost burden will discourage industrial expansion and investment, just as optimism had begun to grow following the Investment Summit 2025.
The gas price hike, driven by persistently high LNG prices, reflects both an economic necessity and deeper structural challenges within the country's energy sector, the release said.
Currently, the power sector consumes 43% of the national gas supply, while industries and captive power plants consume 18% and 16%, respectively.
Citing its internal analysis, BUILD estimated that the economy may face 12.67% inflation as a direct consequence of the gas price hike, assuming fuel accounts for 10% of production costs under ceteris paribus conditions. Given the 26% value addition rate (despite no government-developed profitability or VA index), industrial product prices could rise to Tk9.28 trillion from the previous Tk8.23 trillion.
BUILD also called for long-term planning to ensure full supplies of coal, LNG, and oil. Petrobangla projects that gas demand will reach 4,600 million cubic feet per day (MMcfd) by 2030, with import dependency rising from 22% in FY2020–21 to 67% in FY2030–31.
To meet this demand, the country currently operates two Floating Storage and Regasification Units (FSRUs), capable of supplying 1,100 MMcfd if utilised fully. Combined with domestic production, this could secure the national supply, the organisation said.
"If Heavy Fuel Oil (HFO) supply can be ensured, the power sector can keep load shedding to a minimum," the release added.
BUILD highlighted renewable energy as a viable solution, noting Bangladesh's 300-plus sunny days annually and the untapped potential of industrial rooftop solar systems. Several garment factories have already started using solar power to meet part of their energy needs.
"If 1,000MW of rooftop and grid-tied solar capacity can be deployed quickly, the demand for HFO can be lowered," BUILD said. Agro-based industries are also exploring biogas as a sustainable fuel option, although scalability remains a challenge.
In terms of energy efficiency, BUILD suggested that investment in efficient machinery, LED lighting, and smart monitoring systems could reduce consumption by 20–30%.
To address immediate pressures, BUILD recommended that the government temporarily exempt VAT and Advance Tax at both the import and user levels for the industrial and power sectors, while keeping the current Tax at Source (TDS) structure intact.
The think tank also urged the government to use the Energy Security Fund—as allowed under Section 2.1.1-cha of BERC Order 2025-06—to stabilise gas prices temporarily and avoid a market shock.
"We need to focus more on energy efficiency, reducing system loss (currently at 10.06%), and exploring alternative sources such as solar and biogas," the release concluded.
