Pros and cons of proposed gas-price hike

---

Shahiduzzaman Khan
The government is considering a move for raising gas tariff again. The Energy Division has prepared a fresh proposal last month following the recommendations from the Petrobangla for upward adjustment of the natural gas tariff for seven types of consumers and sent it to the finance ministry for approval. The existing rates continued to be effective from January 2005.
According to a report published in the FE this week, the government will generate additional revenue worth Tk 9.83 billion in the current fiscal year that may help the Petrobangla pay some of its outstanding dues to the international oil companies (IOCs). The gas tariff hike has been proposed at a level between 3.29 per cent to 221.43 per cent, depending on the type of consumers. The implementation of the proposal, upon its approval by the government at its highest level, will affect the consumers like the Power Development Board (PDB), Independent Power Producers (IPPs) and Small Power Producers (SPPs), fertiliser factories, users of compressed natural gas (CNG), captive power units, industries, tea gardens, commercial and residential consumers.
For the domestic consumers, the Energy Division has proposed the increase for double burner cooking stove to Tk 500 from existing Tk 400. The new price for single burner has been proposed at Tk 475 from the existing Tk 350. Price increase for captive power has been proposed by 16.49 per cent, industry and tea garden by 3.29 per cent and commercial establishments by 5.10 per cent. Gas price increase for the PDB, the IPPs, the SPPs and fertiliser plants has been proposed by 15 per cent. The power generation companies are now procuring MCF of gas at Tk 73.91 while the sale rate for fertiliser is Tk 63.41. If the proposed price hike is implemented, the production cost of power and fertiliser will rise by 4.93 per cent and 5.59 per cent respectively.
It has been witnessed that when gas tariff is increased, there is every chance that electricity tariff will also go up as the power generation will become costly. With the rise in power tariff, prices of essential consumer goods are most likely to make another jump. These are all inter-related matters. Stopping such an upward trend about the prices of essentials will be well-nigh impossible.
Only two months back, there was a similar move to raise the prices of the natural gas, fuel oils and electricity simultaneously. Country's civil society, thinktanks and the people raised objections to such a hike. The government appreciated the concern and considered the possible outcome of the simultaneous hike. The country's kitchen market has been undergoing turmoil for the last few months. The initiatives to cool down the market heat are yet to have a positive impact.
Rounds of meetings were held between the government functionaries at different levels and the businesses to restore the latter's confidence. Businessmen have been complaining about asking so many questions about their business activities by various agencies in spite of repeated assurances from the government. With the business people extending their whole-heated cooperation, the market is likely to return to normalcy. But if the natural gas, fuel oils and electricity tariffs are raised again, it is feared that the market will witness another leap forward in terms of price escalation, raising the costs of living for the people in general.
In this backdrop, the Council of Advisers had earlier sent back the proposal for upward adjustment in prices of gas and other utility services, to the ministries concerned for further scrutiny. The nation heaved a sigh of relief then.
The examples of foreign countries like India, Pakistan and Malaysia where there also have been phenomenal price-hike are often cited by some quarters. But one thing must not be lost sight of, here. The income of the people in this country did not rise in line with that of those countries. Per capita income of those countries is higher than that of Bangladesh. The country's middle-income group of people is on the verge of elimination. The poor people are getting poorer day-by-day due to gross income inequalities.
In this context, the renewed move by the Energy Division to raise prices of natural gas does not provide a positive signal about stabilisation of the price situation. Now that the holy month of Ramadan is beginning, the people will, as usual, tend to spend more during this time. If the natural gas price is now raised, all other utility bodies will move to raise the prices of their services. The fares of buses, CNG-driven taxis and scooters will rise. The car owners will have to pay treble the amount they now pay for buying CNG gas, a rise to the tune of 221.43 per cent. The new proposed price for a million cubic feet (MCF) gas will be Tk 225 compared to existing Tk 70. What is the rationale for such a phenomenal hike?
Some development partners are pressing Bangladesh for raising the tariff of fuel oil, electricity and natural gas. They are tagging such conditions to many credit programmes. The government is, undeniably, under pressure to accept such conditions. It should, however, properly weigh the fallouts from acceptance of such conditions. All options do need to be carefully examined and scrutinised. No decision that concerns the conditions of living for the teeming millions should be taken in haste. In all considerations, the national interest should come first and that should be the determining factor in related policy-decisions.