The government may have many reasons to cite in support of the latest hike in power and gas tariff that would come into effect from the first day of the next month. But the timing of the hike and the reasons shown behind it would certainly stir up dissatisfaction among the consumers. Various quarters have found the hike unjustified and even some senior members of the ruling party have urged the government to reconsider the decision.
Undeniably, the government is required to make both upward and downward adjustment, in case of administered prices of those items which fall within its domain, from time to time. While doing so the relevant authorities are expected to keep at the top of their mind the consumers' interest -- their ability to cope with the hike in prices/tariff. It does appear that the government was oblivious of not only the people's interest but also of the impact of the gas and power tariff hike on the economy as a whole. Apparently, the government has also overlooked the market conditions that are usually taken into cognizance while deciding the prices of any item.
The increase in power tariff -- the government raised the tariff at least on six occasions during last six years -- is beyond any logic, particularly when the international oil prices have unabatedly been declining now for a considerable period of time. The primary reason for the Bangladesh Power Development Board (BPDB) incurring substantial financial losses has been the purchase of power from the fuel oil-based rental power plants. The cost of power generation by these plants has gone down remarkably in recent months. Under the prevailing circumstances, it would have been proper for the government to ask the power plants to lower their tariff. Moreover, a good number of rental plants are importing oil directly from the international market.
As far as the power tariff is concerned, the government has decided to do the opposite to what the normal market factors are dictating. The same is true in the case of oil prices. Despite a steep decline in oil prices in the international market, the government, as it seems, is unwilling to pass even a fraction of the benefit on to the consumers. Notwithstanding the fact that the domestic gas tariff is lower than that in many other countries, the gas distribution companies, according to their financials, have been making substantial profits. Moreover, a hefty amount of money, deposited with the gas development fund, has remained largely unused. So, nearly a 50 per cent jump in gas burner tariff at the household level is unjustified.
There are other implications also. The transport owners have made instant demand for a hike in their fares following the increase in tariff of compressed natural gas (CNG). The cost of production in industries that are use gas for power generation in their captive plants would also go up because of 100 per cent hike in gas tariff. So, the latest increase in gas and power tariff, in all likelihood, would discourage private sector investment which has remained almost stagnant for the past few years. More importantly, the hikes have all the potential to stoke up inflation. The core inflation in recent months has been on the upward curve. So, the abrupt and, to some extent, illogical adjustments in power and gas tariff deserve a dispassionate review by the authorities before enforcement.
