Gas tariffs for power plants were raised by 5.36 per cent and the rate for captive power plants hiked 2.5-percent in an executive order issued Tuesday by the government while electricity-price hike comes soon.
The gas-rate rise, with retrospective effect from the first of February 2024, is apparently meant for containing state subsidy under ongoing reform drives.
The raise, which stirs instant reaction, takes place after one year of the previous hike.
A gazette notification published Tuesday by Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) announced the tariff "adjustment".
Under the new natural-gas pricing, gas-fired power plants owned by government, privately owned independent power producers (IPPs) and rental power plants will have to pay Tk 14.75 per cubic meter instead of previous tariff of Tk 14.
New tariffs for captive power plants, small power plants and commercial power plants have been fixed at Tk 30.75 per cubic meter from the previous Tk 30.
Tariffs for other gas-guzzling consumers will remain unchanged.
With the hikes, the government will be able to keep the subsidy amount in gas sector within Tk 60 billion in the current fiscal year, 2023-2024, considering current price of liquefied natural gas (LNG) on the international market and US dollar exchange rate, an EMRD clarification spelt out in Tuesday's notification.
Bangladesh has eight types of gas consumers of which, 37 per cent of gas is consumed by power plants, 23 per cent by industries, 18 per cent by captive power plants, 10 per cent by household consumers, 7.0 per cent by fertiliser factories, 4.0 per cent by compressed natural gas (CNG) filling stations, and 1.0 per cent by commercial users and tea states combined.
The government previously hiked natural gas tariffs by up to 178.88 per cent by executive order with effect since February 1, 2023.
Households, fertiliser factories, compressed natural gas (CNG) and tea estates were also exempted from the previous tariff hike announced on January 18, 2023.
During the previous revision, the government raised the maximum tariff for government power plants, IPPs and rental power plants owned by private sector by 178.88-per cent to Tk 14 per cubic meter from previous rate of Tk 5.02.
Gas tariffs for small and cottage industries were raised by 178.29 per cent to Tk 30 per cubic meter from previous Tk 10.78.
Rates for captive power plants, small power plants and merchant power plants were raised by 87.50 per cent to Tk 30 per cubic meter from previous Tk 16.
The hike for big industries was 150.41 per cent to Tk 30 per cubic meter from previous Tk 11.98.
For medium-category industries, the gas tariff has been hiked by 154.66 per cent to Tk 30 per cubic meter from previous amount of Tk 11.78.
Commercial consumers, including hotels, restaurants and similar business outlets are to pay 12.80-percent higher to Tk 30.50 per cubic meter from previous Tk 26.64.
Sources say a separate gazette notification is set to be published within a couple of days announcing new power tariffs.
Talking to newsmen Tuesday at his secretariat office state minister for the MPEMR Nasrul Hamid said the new retail-level power tariffs will be effective from March 1.
"Power tariffs will be hiked by 34 paisa to 70 paisa per unit (1 kilowatt-hour) considering the consumption levels of the clients," he said.
Power clients who consume up to 50 units will have to count a price hike of 34 paisa per unit, Mr Hamid clarified.
Those who will consume above 50 units have to count extra tariffs ranging from 34 to 70 paisa per unit.
Mr Hamid was, however, reluctant to call the increase in tariffs a tariff hike.
"If the government had charged more than the cost, it could have been called a tariff hike," he says to justify the measure, adding: "Since the deficit is huge, the price is being adjusted."
He reminds that electricity is sold at a lower price than production cost.
The exchange rate of a US dollar was estimated at Tk 70-80 during the setting up of coal-fired power plants, but the dollar price soared by around Tk 40 per dollar or more, Mr Hamid said, adding that it fueled up electricity-generation costs.
Power tariffs are adjusted based on fuel costs across the world, he says.
The government has already phased out costly rental and quick-rental and diesel-based power plants, he told the reporters.
Another big power plant is set to come online soon, he said, adding that solar power having the generation capacity of around 2,000 megawatts is also set to be added in to the national grid within next two years, said Mr Hamid.
He also said an automated fuel pricing might be introduced from March to keep the petroleum prices at par with the international market.
Azizjst@yahoo.com