The Bangladesh Energy Regulatory Commission (BERC) has raised the average price of gas by 22.78% for retail consumers, which will be applicable from this month.
As per the new tariff order announced by the energy regulator on Sunday, one cubic metre of gas will now cost Tk11.91, up from Tk9.70.
From this month, non-metered double burner domestic gas users will have to pay an additional Tk105 each month as the price has been raised to Tk1,080 from Tk975. Meanwhile, the price of gas for a single burner user has been hiked to Tk990 from Tk925.
In the latest order, the fertiliser sector has seen the highest 260% price hike, with the price per unit climbing to Tk16 from the existing Tk4.45. On the contrary, gas price for small and cottage industries has been reduced by 36.73%. Meanwhile, the price of compressed natural gas (CNG) has remained unchanged.
With the latest development, gas prices have increased by 174.42% in the last 13 years. In 2009, the average price of one cubic metre of gas was Tk4.34 which is now Tk11.91.
While announcing the new tariff, BERC Acting Chairman Mohammad Abu Faruque said the gas price has been revised to adjust to the LNG import expenditure.
"Apart from the retail level price hikes, the commission also considered taking Tk3,300 crore from energy security fund, Tk2,500crore from retained earnings, and Tk6,000 crore from the government support (subsidy) to meet the LNG import cost," said Mohammad Abu Faruque.
At present, only 3-4% of the total 3,000 million cubic feet of daily gas supply comes from the spot LNG.
In January this year, Petrobangla proposed that the BERC increase the average gas price up to Tk15.30 cubic metre, while six gas distribution companies demanded an increase in the gas price up to 117% to Tk20.36 per cubic metre.
In the proposal, Petrobangla said the gas price needs to be increased as it has to import LNG at high prices from the spot market amid the volatile international market.
As per the new tariff, public, private and rental power producers will have to pay Tk5.02 per cubic metre of gas to produce electricity, which is now Tk4.45.
Captive power, small power plant and commercial power plant will have to pay Tk16 for one cubic metre instead of present Tk13.85.
Price of gas for commercial use i.e. in hotels and restaurants has jumped to Tk26.64 from Tk23 per cubic metre.
In an immediate reaction to the gas price hike, Professor Shamsul Alam, senior vice-chairman of the Consumer Association of Bangladesh, told the media that as always, the public hearing held in this regard turned into a farce.
"No arguments presented in the public hearing were taken into account. Prime minister's Energy Adviser Tawfiq E Ilahi Chowdhury went to the BERC on 3 June and prescribed the new tariff," he said.
Earlier, he had said there was no justification for a gas price hike as only 3% of the gas supply comes from spot LNG.
Industry owners, however, have welcomed the new gas tariff saying the captive power and industrial rates have been kept at a tolerable level.
Mentioning that the price of one cubic metre of gas for generating captive power – widely used in the readymade garment industry – has been increased by 15.52% and for large industries by 11.96%, AKM Salim Osman, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, "The BERC has fixed the rates in consultation with the government. We are deeply grateful to Prime Minister Sheikh Hasina for her advice to the BERC to keep gas prices at a tolerable level."
"We believe that we will be able to adjust the price of gas fixed by the government in the textile production system and will be able to maintain the growth trend in knitwear."
Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), said they feel the gas price will be fairly tolerable for industries that are running on gas-based captive power. "As a result, the proposed gas tariff will play a role in making the price of yarn competitive by helping industries overcome the existing volatility in the global raw material supply chain."