Flood, inflation force govt to drop plan to raise oil, gas, power prices

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S M Jahangir
The government's decision to increase the prices of power, gas and petroleum simultaneously has been stalled as the country faces a devastating flood coupled with soaring inflationary pressure.
"The interim government is preferring not to go for any immediate upward adjustment of fuel oil, natural gas and electricity prices, taking the onslaught of current floods and a higher rate of inflation into consideration," an official source said.
According to the official, the government believes that such upward adjustment may contribute further to the inflation, the rate of which is estimated to be over 8.0 per cent now.
The proposals for increasing the prices of electricity, natural gas and petroleum oil had recently been placed before the Council of Advisers for approval, sources said.
According to Energy Division officials, the enhancement of power tariff would not be possible until the prices of natural gas and petroleum fuel were readjusted.
"We have to wait until fresh rates of natural gas and petroleum oil are announced before proposing a new tariff for electricity," a senior Power Division official said.
The official said the Power Division recently placed a proposal for the increase in the electricity tariff before the interim cabinet based on the possible price hike of gas.
Sending back its proposal, the cabinet asked the Power Division to place it again in the form of a summary, he mentioned.
Earlier, the government initiated the move to raise prices of gas, power and petroleum oil in order to minimise the losses sustained by the state entities on account of selling those at reduced rates, sources said.
Currently the parent gas company - Petrobangla - purchases gas at US$ 2.50 per unit (1,000 cubic feet) on an average from the International Oil Companies (IOCs) and sells at $1.50 per unit resulting in a loss of $1.0 for every unit of gas sold, a senior EMRD official said.
Against the backdrop, the Energy and Mineral Resources Division (EMRD) had proposed for raising the gas prices for domestic use by 25 to 36 per cent, for bulk consumers by around 10 per cent and for compressed natural gas (CNG) by around 77 per cent.
But, the Power Adviser Tapan Chowdhury earlier told the media that the government will have to enhance the power tariffs, simultaneously with the price adjustments of oil and natural gas.
He observed that since the price of natural gas is linked with the generation cost of electricity, the power tariff would go up should the price of natural gas be increased.
The interim government had raised the power tariff by 5.0 per cent from March 1 last for all types of consumers, including residential, industrial and agricultural.
The proposal for increasing oil prices has been made against the backdrop of huge losses, sustained every year by the state-run Bangladesh Petroleum Corporation (BPC) on account of selling the items at lower than its import rates.
BPC has to incur losses amounting to Tk 9.50 on selling of per litre of diesel and Tk 9.0 on per litre of kerosene due to the rise in oil prices in the international market, official sources said.