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BERC Public Hearing

Gas price hike move opposed strongly

Star Business Report
Bangladesh Energy Regulatory Commission (BERC) yesterday held its first public hearing on the proposed gas price hike up to 65 percent amid strong opposition from businesspeople and consumers.
Stakeholders and representatives of different trade bodies, chambers and Consumers Association of Bangladesh (CAB), who attended the hearing, said the hike would further increase prices of food items. Business people also pointed out that hiking gas prices would double the cost of business.
BERC Chairman Ghulam Rahman and four BERC members were in the judges' panel of the daylong hearing held at the commission's office.
After the hearing former Bangladesh Textile Mills Association president MA Matin, who represented the organisation at the hearing, said the proposed
increase in gas prices would defi nitely hamper investment growth in the industrial and manufacturingsectors.
"The cost of doing business will double if the proposed gas price hike is implemented. The government cannot increase gas prices abnormally since distributing companies can hardly maintain the required supply of gas for smooth running of industrial units," he said.
He, however, said since Petrobangla, the state-owned oil, gas and mineral exploration corporation, has been languishing for making profit over the years, the BERC can propose raise in gas prices to a reasonable level.
Terming the proposed gas price hike abnormal, MA Matin, also managing director of Malek Spinning Mill, said the proposal for increasing gas prices more than 72 percent for captive power plants is discriminatory. Petrobangla proposed increasing gas prices for commercial users by 26.08 percent, meaning that per-unit (1,000 cubic feel or 1 mef) price of gas will go up to Tk 291.59 from theexistingTk233.12.
Earlier, Petrobangla Chairman Jalal Ahmed said in the proposal that his organisation's cumulative deficit on account of undercut gas supply to international oil companies is abou t Tk 2,000 crore.
"If we do not raise gas prices, Petrobangla will have to go bankrupt soon, which will ultimately make it unable to go for further exploration," he had said to justify the merit of the government move.
During his expression of opinions as an independent expertise at the hearing, Prof Nurul Islam of Bangladesh University of Engineering and Technology (Buet) strongly supported the proposed hike.
"There is no way but to increase gas prices for minimising the losses of Petrobangla," hesaid.
He hinted at the lack of transparency in gas distribution by some companies to make a windfall profit. "I firmly believe that smooth supply of gas can be ensured by increasing the price of this natural resource," he said.
Opposing the hike proposal, representatives of the Metropolitan Chamber of Commerce and Industry, CAB, Dhaka Chamber of Commerce and Industry, and Bangladesh Chemical Industries Corporation said the prices of foodstuffs would go up again in local markets as the prices of agri-inputs would also go up following the gas price hike.
"As a result, the country's food security will be at a crossroads. So, the price hike should be at a rational level," the representative of Transparency International Bangladesh (TIB) said at the hearing. He expressed concern that stagflation and increase of urban poverty would stem from hiked gas prices.
The representative from the state-owned Bangladesh Power Development Board (PDB) also said a fresh price hike of gas would seriously hamper power development.
Earlier, in its proposal submitted to the BERC on June 23, Petrobangla suggested a variable
price hike for its different catego rics of consumers, the average hike belng65 percent.
Petrobangla suggested raising the price to Tk 600 for domestic consumers from the exlstingTk 400 for a double-burner oven and Tk 550 for a single-burner oven against the present rate of Tk 350. The rise in this case is 50 percent.
Domestic consumers using meters will have to pay Tk 208 instead of Tk 130 with an increase of26.81 percent.
For industrial consumers, the proposed per-unit price of gas isTk 182.25, a 23.03 percent raise over the present rate of Tk 148.13. The same rate will apply to tea-estates.
For captive power plants, the proposed rate is Tk 182.25 per unit, a 72.60 percent increase from tire prcsentTk 105.59.
Petrobangla proposed Tk 93.73 per unit for the PDB, independent power producers, and small power plants instead of Tk 73.91, raising the gas price by 26.81 percent.
For fertiliser industries, Tk 93.73 has been proposed with an increase of 47.81 percent from the prcsentTk 63.41 per unit gas.
Concluding the hearing, tire BERC will announce its final decision by October 30 through an official order to Petrobangla.
BERC Chairman Ghulam Rahman said the BERC would keep records of all pre- and post-hearing public opinions until October 6 and that public opinions would be received during this stipulated timeframe.