Do not implement proposed gas, power price rise

With the war raging in Ukraine, the global economy is facing a variety of adverse impacts, starting from supply chain disruptions to economic convulsions. While some economies are at the edge of a precipice with widespread social unrest, others are grappling with arbitrary price hikes of essentials. Bangladesh always sees price rise of commodities in Ramadan; this year, the price hike has been more marked than the previous years with the war in Europe being exploited by errant traders.

The Ukraine-Russia war is having a direct impact on our economy. And there is, of course, a need to take all precautions to ensure that in the coming days, Bangladesh does not see a scarcity of necessary items.

At the same time, to keep the business environment secure, the price of gas and electricity has to be kept within a tolerable limit. As per a report published in this newspaper yesterday, the Federation of Bangladesh Chamber of Commerce and Industries, FBCCI, in a letter, urged the Prime Minister's Office to postpone the proposed price rise of gas and power, keeping in mind the need to preserve a favourable business environment.

We believe this is a timely move because ensuring a stable and favourable business environment is essential in these uncertain times. Moreover, as a player in global commercial operations, Bangladesh will have to face impediments to the ongoing conflict in Ukraine.

These hindrances, in time, will inevitably result in price rises in the local market. The ongoing foreign exchange scarcity in the country is just a chilling reminder of one of the many fallouts of the European conflagration.

At this moment, several South Asian neighbours have already adopted stringent measures to cap public spending and nationwide austerity measures. The highest authority in Bangladesh has also asked the nation to practice austerity as a pre-emptive measure to stave off possible economic turbulence. Everything said and done; it's also the government's responsibility to maintain the price of power, gas, and other amenities essential for industrial production. Many Western manufacturers may want to explore South Asian markets for comparatively lower production costs. Therefore, to lure foreign investors, the government's priority must be to ensure an uninterrupted supply of power, gas, and water at an affordable rate.

Reportedly, Bangladesh Energy Regulatory Commission, BERC, has recommended a bulk increase in electricity price by 58 per cent. Understandably, if this is acted upon, business costs will go up, deterring new investors and hurting local manufacturers.

Taking economic implosions of other nations as a warning, Bangladesh has already begun taking steps to curb all non-essential expenses. A prudent move would be to issue a price hike suspension on certain services to provide the much-needed fillip for businesses.

Leaving aside foreign investment, local businesses exporting overseas will have to face additional costs in sending their products overseas, which will affect profit margins in the long run.

At this moment, fortifying steps to stave off any potential economic upheaval warrants utmost attention, along with vigorous exploration of alternative power sources, including hydroelectricity.

There has been talk about a hydroelectric alliance with Nepal and Bhutan, although progress on the project stalled due to the pandemic. Reviving it can be the first step, followed by similar endeavours in the private sector.

The war at the heels of the Covid-19 pandemic has only worsened the economic front. Keeping this in mind, the government's priority should be to ensure maximum amenities for minimum expenditure.

The hydroelectric approach intertwines with SDG 7 of sustainable development goals. And the authorities can seek international expertise from the IFC and the EU.

The move by FBCCI aims to insulate our businesses while creating an appealing market for foreign investment. Hopefully, the authorities will act in the interest of the businesses, taking steps that solidify the country's defences against economic ferment.