Bangladeshi exporters, especially those in apparel and leather sectors, will lose competitive edge in global markets as they fear that the latest spell of hike in gas prices will push up production cost. The Bangladesh Energy Regulatory Commission (BERC) recently issued a circular increasing gas prices at different rates effective from 1st July, 2019.
For industrial use, gas price has been increased by 37.88 per cent from Tk7.76 to Tk10.70 per cubic metre, while for captive power it has been increased by 43.97 per cent from Tk9.62 to Tk13.85.Gas price for the power sector has been increased from Tk3.16 to Tk4.45 per cubic metre with a 40.82 per cent rise.
“On the basis of the information I have, gas bill will take up around 1.5 per cent of the manufacturing cost. So 38 per cent increase in gas price means almost 1 per cent increase in production cost. This may not sound much in terms of percentage, but for an industry struggling for every penny this will be another blow,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq said. “Now, given the fact that the supply situation of gas did not improve and factories are suffering from pressure fluctuations, we are in tipping point with regard to pricing.”
Entrepreneurs are not feeling encouraged to invest due to numerous challenges and this sudden increase in gas price cripples their financial plan, such as increase in gas price will only add up to production cost making the business difficult for the SMEs whose break-even is on a thin ice now, the trade leader finds.
Meanwhile, primary textile sector people have urged the government to increase prices of gas in phases, which they think will mitigate the pressure. According to Petro Bangla data, in the fiscal year 2017-18, Bangladesh produced 966684.63 mmcm gas.
Of the total production, 40.60 per cent was used in the power sector, the highest, while 16.96 per cent was used in industry, followed by captive power 16.35 per cent, domestic 16.06 per cent, fertilizer 4.38 per cent, compressed natural gas (CNG) 4.70 per cent, commercial 0.83 per cent, and tea estates 0.10 per cent.