BERC proposes raising gas price for fertiliser plants to Tk30 per cubic metre

The Bangladesh Energy Regulatory Commission (BERC) has proposed increasing the gas tariff for fertiliser plants to Tk30 per cubic metre, up from Tk16, as the government struggles to balance energy costs, production losses and agricultural subsidies.

The proposal, presented today (6 October) at a public hearing on re-fixing the natural gas price in the fertiliser category, follows a joint petition by Petrobangla and six gas distribution companies, who sought an even higher rate of Tk40 per cubic metre.

Petrobangla and the six distributors told the hearing that the average cost of gas supply now stands at Tk28.78 per cubic metre, while the average selling price is Tk22.93, resulting in a loss of Tk5.85 per unit. 

They warned that the gas sector faces a deficit of Tk12,291 crore this fiscal, of which government subsidies cover only half. They argued that without a price revision, they would struggle to maintain gas imports and ensure regular supply.

The industries ministry, which oversees state-owned fertiliser plants under the Bangladesh Chemical Industries Corporation (BCIC), requested the price review following repeated disruptions in production due to gas shortages. 

BCIC officials said the ministry is willing to accept a higher tariff if it ensures steady gas supply to the factories. Presenting data at the hearing, BCIC showed fertiliser output has plunged due to gas shortages.

Jamuna Fertiliser operated only 14 days in FY25, while others faced months-long shutdowns. BCIC argued that even at Tk30 per cubic metre, local production would remain cheaper than imports but suggested Tk20 as a balanced rate.

Several participants warned that raising prices could increase production costs and, in turn, put pressure on food prices. However, Md Moniruzzaman, agriculture deputy secretary, assured that retail fertiliser prices for farmers would remain unchanged, as the government already provides Tk13,000 in subsidy per tonne.

BERC Chairman Jalal Ahmed said opinions on the proposed tariff will be accepted until 13 October, after which the commission will make its final decision.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, told TBS that the main reason fertiliser plants are not receiving adequate gas is the overall shortage in the country. "Will increasing fertiliser prices make it possible to boost gas supply to those factories?"

He explained that gas demand from industries, export sectors, and power generation is growing rapidly. "Diverting gas from these areas to fertiliser factories would not be logical, as importing fertiliser remains more cost-effective."

Zahid said if gas prices are increased, government subsidies on gas will decrease, and Petrobangla's financial position will improve. However, if the government keeps fertiliser prices unchanged for farmers, subsidies in the agriculture sector will rise.