Small businesses and rising energy cost

Recent energy pricing in Bangladesh is putting immense pressure on small and medium enterprises (SMEs), the backbone of our economy. In April 2025, the Bangladesh Energy Regulatory Commission (BERC) raised industrial gas prices by 33 per cent, with captive-power users now paying Tk 42 instead of Tk 31.5. Simultaneously, fuel prices continue to fluctuate under the automatic pricing mechanism.

For SMEs-particularly those in manufacturing, delivery, and service sectors-these cost increases come at a time of narrow profit margins, declining export orders, and stiff competition. Higher gas and fuel bills directly raise production and transport costs, reducing pricing flexibility. Many small firms may be forced to cut capacity, raise prices (hurting demand), or even close operations, weakening the entrepreneurial ecosystem vital for job creation and innovation.

Adaptation is possible. SMEs can improve fuel efficiency by consolidating transport logistics, shifting operations to off-peak hours, or investing in low-cost local renewable energy. These efforts, however, need support. The government, in collaboration with financial institutions, should provide low-interest green energy loans, tax credits for fuel-saving equipment, and targeted transport subsidies for micro-enterprises.

Policy signals also matter. Cost shocks introduced without transitional support risk creating liquidity crunches, stunted growth, or closures for SMEs. Energy-cost reforms must be paired with smart, targeted support if Bangladesh's entrepreneurial dynamism is to survive and employment momentum maintained.

Najiza Israt Rifa

Department of Finance and Accounting

North South University

Najiza.rifa@northsouth.edu