Shawdesh Desk:

The Bangladesh Energy Regulatory Commission is evaluating a Petrobangla’s proposal to increase by up to 152 per cent the price of gas supplied to industries and captive power plants.

Now a decision on the state-owned agency’s proposal seeking to set the gas price for the two consumer categories on per with imported liquefied natural gas price is due to come by the first half of March.

The decision will come through a public hearing — such hearing has not held since 2023 after the Awami League government ousted amid a mass uprising on August 5, 2024 had curtailed the BERC’s authority to set energy tariffs.

The prospect of the gas price hike angered industrialists who likened the price hike move to following in the footsteps of the past fascist government: trying to solve problem by increasing price arbitrarily.

Industrialists warned that the gas price hike would raise production costs, eventually impacting ordinary people. Production costs would particularly increase in some industries, such as steel, ceramics, glass, and textiles, whose production is directly reliant on gas, they said.

‘BERC’s technical evaluation will complete in about 20 days,’ said Khalilur Rahman Khan, secretary of the BERC.

The public hearing will be held based on the findings of the technical evaluation committee, he said.

The price increase proposal has been approved in principle by the power, energy and mineral resources ministry. The proposal sought the per unit gas price supplied to industries to be increased by more than 152 per cent to Tk 75.72 from existing Tk 30. Per unit gas price for captive power generation has been proposed to be increased by 140 per cent to Tk 75.72 from existing Tk 31.50.

The ousted AL government increased the gas price for four consumer categories, including industry, by up to 179 per cent in January 2023.

In its proposal sent to the BERC, the Petrobangla argued that the gas price needs to be raised to increase its supply from both domestic and import sources to reduce the widening gap between the demand and the production, the same justification used by the past AL government for frequently increasing gas price.

The current gas price was calculated considering LNG import of 1,000mmcfd. But the past government never imported that much of LNG, leaving industries and households depending on gas supply in a serious crisis.

‘This is definitely not the right time to increase energy price,’ former Dhaka Chamber of Commerce and Industry president Abul Kasem Khan told New Age, referring to the slowing down of the country’s economic growth.

Struggling to recover from the Covid pandemic impact, coupled with the dollar crisis and staggering inflation, he said, many industrialists were considering closing down their businesses.

‘Gas is an important raw material and energy source. We are losing competiveness daily. Price hike will block future industrial expansion as well,’ he said.

Bangladesh began importing LNG on August 19, 2018. Until November past year, the average LNG import was 579mmcfd. In 2023-24, the highest annual LNG import of 676mmcfd was recorded. The import dropped a little in 2024-25. The current LNG import capacity is 1,000mmcfd.

A technical evaluation of the BERC revealed in March 2022 that the Petrobangla pocketed Tk 2,538 crore by importing 553mmcfd less LNG than promised in the financial years 2019-20 and 2020–21.

The Petrobangla in its latest proposal estimated that the deficit from selling gas in less than its production price would exceed Tk 16,162 crore if 101 LNG cargoes are bought. The deficit would reach Tk 22,315 crore next financial year if 115 cargoes are bought, the estimation said.

Any new gas connection seekers in industries and captive power plants would have to pay the new price for their entire supply, the Petrobangla proposed.

Those who were promised gas connection but are yet to get it would have to pay the new price for half of its sanctioned load while the rest half of the load could be bought with the previous price, the proposal said.

Existing gas consumers would have to pay the new price if their consumption surpasses sanctioned load, the proposal said.

Businesses said that existing industrial consumers receiving gas more than their sanctioned load sounded like an unreal proposition to many. Industries complain about gas pressure in their pipeline falling nearly zero, they said. In Gazipur area, some industries regularly complain about gas pressure dropping to one to two PSI against the supposed 150.

Captive power production price hike would also contribute to increasing industries production cost, businesses said, adding that industries produced their own power because of unreliable national grid.

Bangladesh Textile Mills Association president Showkat Aziz Russell told reporters on Wednesday that the decision to sell gas at import price would be detrimental to the country’s industries.

Calling the move absurd, particularly because it came without consulting business communities, Russell said that people were expecting energy price to go down after the interim government assumed power through the people’s movement.

If the proposed gas price is approved, the gas price in industries would increase to Tk 75.72 from Tk 16 set in January 2023.

Bangladesh’s current gas demand is about 4,000mmcfd, but the supply remains below 3,000mmcfd. In 2023-24, the average gas supply was 2,493mmcfd. The approved load is 5,356mmcfd.

The piped gas is a blended supply of locally extracted natural gas and imported LNG. Imported LNG accounts for a fourth of the supply. The Petrobangla predicted in its proposal that the share of LNG in the piped gas supply would rise to 75 per cent by 2030-31.

The cost of per cubic metre of imported LNG ranges between Tk 65 and Tk 70.

Bangladesh’s local gas supply is ensured by three state-owned companies and two international oil companies. Piped gas is supplied through six distribution companies.

Two companies are currently regasifying LNG imported through long-term contracts and spot market purchases. About three-fourths of the import comes through long-term contracts.

Three new LNG terminals, including a land-based one, at different stages of development, were cancelled after the interim government assumed power since the development work was won without tender.

Bangladesh cannot drastically increase its import unless new LNG handling capacity is built. New LNG handling capacity is currently at a very preliminary stage.

According to a United News of Bangladesh report: commerce adviser Sk Bashir Uddin has described the move to raise gas price from Tk 30 to Tk 75 per cubic metre as ‘unpleasant yet unavoidable’.

‘The decision to raise gas prices is not a pleasant one for the government. However, it is necessary. The adjustment will be carried out through the Bangladesh Energy Regulatory Commission after discussions with entrepreneurs,’ he said on Wednesday.

Speaking at the inauguration of GAPExpo-2025 at the International Convention City Bashundhara in Dhaka, the adviser acknowledged the challenges posed by the price hike.