Nasrul Hamid, state minister for the Ministry of Power, Energy, and Mineral Resources, and Salman F Rahman, prime minister's private industry and investment adviser, have assured businesses that they will pursue the Bangladesh Bank for $2 billion to import fuel, according to sources present at a meeting between the government policymakers and business leaders.
They will also request the central bank to raise the Bangladesh Petroleum Corporation's LC limit to import more furnace oil.
To this end, Nasrul Hamid and Salman F Rahman will meet with Bangladesh Bank Governor Abdur Rouf Talukder next week.
At the meeting, the state minister told Salman F Rahman, "If we cannot support businesses at this time of crisis, what will we do with $36 billion in our reserves? You keep $2 billion aside for them [industries] and let me handle the whole situation."
If $1 billion is spent on fuel imports for industries, it will pay back $4 billion in the form of export earnings, meeting sources quoted Nasrul Hamid as saying.
Billions in investment at risk
"There is no point in keeping $36 billion in our reserves if we cannot ensure necessary fuel for industries. If the supply crunch continues this way, billions in investments will be at risk," the state minister said at the meeting held at the Bangladesh Investment Development Authority (Bida) building at Agargaon in the city on Wednesday.
A group of business leaders, led by the president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) Jashim Uddin, participated in the meeting.
The meeting was held at a time when export-oriented industries, especially textile, garment and ceramic manufacturers, are desperately persuading the government's top policymakers to get adequate gas and power supplies during the ongoing energy crisis.
"Must import fuel at any cost"
Dr Salehuddin Ahmed, former Bangladesh Bank governor, recently told The Business Standard, "To keep industries running, we have to import fuel at any cost. There can be no justification for stopping this import only because we will have to bear an additional $200 million."
Spending this amount on the manufacturing sector is not a big deal, he noted.
"We still have $36 billion in our forex reserves. If this amount cannot be spent, what is the use of the reserves?" he said.
If production falls, so will exports earnings leaving no chance to shore up the reserves. Again, imports of food and other products will go up because of the reduced production, causing a further depletion of the reserves, Dr Salehuddin pointed out.
The state minister at the meeting said they had talks with different countries, such as Qatar, Brunei and Oman, for procuring LNG from them on the spot market. Only Qatar has agreed to supply this gas.
Furnace-oil based power a cheaper option
The government is also mulling over increasing furnace oil-based power generation amid a growing gas crisis. They cannot afford to produce power from diesel-based plants for a high cost, he noted.
"So, we are planning to go for furnace oil-based power generation – a cheaper option," he pointed out.
The electricity production from furnace oil-based plants costs Tk17 per unit, diesel-based plants cost Tk37 and gas-based plants cost Tk3-Tk3.5 per unit.
The government will also urge the central bank to increase the LC limit for importing furnace oil by Bangladesh Petroleum Corporation (BPC), Nasrul Hamid said.
The state minister for power and energy at the meeting said fuel prices at the consumer end have soared because of high dollar prices and global rise in fuel prices.
He suggested that business leaders request the National Board of Revenue to collect a fixed amount in tax and duty on fuel imports, instead of levying the existing percentages.
After the meeting with business leaders at Bida, Nasrul Hamid told the media, "We will take initiatives to resolve the gas supply problem so that situation does not deteriorate."
The business leaders complained that industries are not getting gas at adequate pressure in some particular areas. "We will fix them," he promised.
Regarding business leaders' request for increasing gas import spending, Salman F Rahman said the issue does not depend on foreign exchange reserves.
"It is the issue of availability of gas at an affordable price…the price in the global market has increased several times. If we procure at a high price, we will have to supply at a high price," he also told the reporters.
The gas supply has remained the same as it was last year. But demand for gas in Narayanganj and Gazipur industrial zones have grown significantly, he noted.
FBCCI President Jashim Uddin said business leaders have proposed different options for enhancing gas supply to industries.
"We will further discuss the issue. We will all be trying to resolve the problem unitedly," he said.