Saturday, May 04, 2024
Amid soaring living costs, the government has taken decision to hike the gas and electricity prices which will create extra burden for the low-and middle-income people, according to experts and consumer rights groups.
They have also expressed concerns about its impact on low-income households.
The government has taken the decision about the hike of gas and electricity prices despite repeated promises to control inflation. The price hike will also fuel inflation which already hit a record high.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid told journalists at the secretariat on Tuesday that the electricity price may be increased from Tk 0.34 to Tk 0.70 per unit from March.
The price of gas used in power plants and industrial captive generators has been increased by Tk 0.75 per unit, which has come into effect this February, according to a gazette notification issued by Energy Division on Tuesday.
The fuel oil price will be adjusted with the international market from the same month, confirmed Nasrul Hamid and indicated that the prices of diesel, octane, petrol and other petroleum products will further increase.
The government attributed the price hike to the production cost of electricity exceeding its selling price. They aim to bridge this gap through gradual price adjustments over next three years.
Nasrul Hamid cited the significant increase in the USD price compared to when coal power plants were established, leading to higher production costs. He emphasised that energy cost adjustments are a global practice.
However, energy experts have repeatedly suggested that the government reduce costs without raising gas, electricity, and fuel oil prices. These measures include cancelling inefficient and rental power plants, withdrawing from expensive projects, and reforming the capacity payment method.
The Centre for Policy Dialogue (CPD) has urged the government to prioritise domestic gas exploration over LNG imports.
But the reality is that the government focused more on increasing expensive projects, as highlighted by the CPD’s recent study. For example, around 8,000 megawatts of gas-based power plants are being constructed despite the scarcity of gas.
CPD fears that these power plants will draw thousands of crores of taka in capacity payments without generating electricity, further burdening the public in the future.
The Consumers' Association of Bangladesh (CAB) Senior Vice President M Shamsul Alam told The Business Post that there is Tk 30,000 crore of fraudulent expenditures in the power sector. “If these are reduced, there will be no need to raise prices.”
Gas price hike
Apart from the electricity price hike, there were concerns that the government might increase gas prices from March. However, a gazette notification issued by Energy Division on Tuesday revealed that gas prices have been increased from February.
The price hike is applicable only for gas-fired power plants. The government has also increased the gas price for captive generators used in industries by Tk 0.75 per unit.
The price of gas supplied to power plants has been increased from Tk 14 to Tk 14.75, and for captive power, it has been increased from Tk 30 to Tk 30.75. The Energy Division said that due to the gas price hike, subsidy on LNG and gas sector stands at Tk 6,000 crore.
Oil prices may also increase
Nasrul Hamid told reporters on Tuesday that the price of fuel oil will also be adjusted in the first week of March.
The government will go for 'dynamic pricing', where the price will be adjusted if the price of crude oil in the world market increases or decreases.
In the meantime, the government has allowed the private sector to import fuel oil. The Energy Division sources said that private entrepreneurs want the price of oil to be increased further.
They are therefore pushing for the price of oil to be determined based on the invoice value. Nasrul Hamid recently said that if the price is determined based on the invoice value, the price of oil may also increase.
