The recent decision to increase the gas prices for new industrial units by 33% has been greeted with concern, grumblings, and disappointment. Bangladesh Energy and Regulatory Commission has downplayed objections from businesses and consumer rights groups, saying the raise has been much lower than the 150% asked by the gas distribution companies. Here is what has happened.
To get a gas connection, a newly established industrial unit will now have to pay 33% more than the existing industries. There is more to it. According to the BERC verdict, after hearing stakeholders, existing units will also have to pay the new rate for consuming more than their sanctioned load. The industrial plants that are yet to start operation despite having permission must pay 50% of their consumption at the current rate and the remainder of their sanctioned load at the new rate.
According to a report in the Daily Star, the latest rates mean new industrial connections will be charged Tk 40 per cubic meter, up from Tk 30.
Similarly, new captive users will have to pay Tk 42 per cubic meter, up from Tk 31.5. Captive gas consumers are entities that have their gas-fired power plants to produce electricity primarily for their own consumption.”
Despite the new tariff structures that businesses and consumer rights groups say would hurt the industries and thus the economy, BERC Chairman Jalal Ahmed insists they have tried to soften the pain of the industries. It surely is a big move to cut the hike to 33% as compared to the proposed 150%.
The culprit here is the LNG, which is an imported item. Since the country does not produce enough natural gas to meet the industrial demands, the government has to import LNG at a higher cost. The industries, especially the new ones, have to share the burden of the costs, one of the prescriptions from the International Monetary Fund, which is lending us $4.7 billion, part of which has already been disbursed. To make the gas supply smooth for the textile industries, the government has already closed major fertilizer factories that use gas as their main raw material. The existing stock of fertilizer is expected to meet the demand until the full cropping season starts, the authorities argue.
No matter how forcefully the government makes its pro-hike argument, businesses and consumer rights activists remain unconvinced. The Consumers Association of Bangladesh (CAB), which had been a part of the public hearing, voiced concern with a human chain protest against the proposed hike. It is clear in its argument: increased gas prices would stifle new investment, hinder job creation, disrupt exports, and severely impact the economy.
Business leaders agree. Consider what Shawkat Aziz Russell, president of the Bangladesh Textile Mills Association, says. According to him, the government has been following the path of the previous government, ignoring the search for new gas reserves in the country and instead going for LNG imports. Members of the association are among the largest industrial gas consumers. The association has long been critical of the past government’s dependence on imported LNG because the policy was aimed at serving the interests of a few oligarchs. "Unfortunately, the current government also seems to be walking the same path. Now they will have to decide whether they will let the country's industrial sector be destroyed or take effective steps to move it forward," said Shawkat as quoted by the Daily Star.
His worries have been echoed by leading trade bodies, including the Foreign Investors’ Chamber of Commerce and Industry (FICCI), representing 35 countries in 21 sectors, and the Dhaka Chamber of Commerce and Industry (DCCI).
The latest hike in industrial gas use comes at a time when the recently held much-hyped Bangladesh Industrial Summit 2025 went all the way to showcase Bangladesh as the new industrial hub and wonder. But the hike is giving the wrong message at the right time.
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