It's not making a choice between devil and deep blue sea
Wednesday, 11 July 2007
Shamsul Huq Zahid
Energy adviser Tapan Chowdhury is undone. He told the media last Monday that the government was left with little option other than raising gas tariff for all types of consumption to compensate for the losses being incurred by the state-owned companies involved in the marketing of the same.
The ministry of power, energy and mineral resources has already sent a proposal for increasing gas tariff to the council of advisers for consideration. The adviser also hinted at possible hike in fuel oil prices in view of the rise in the prices of the commodity in the international market.
It is very likely that the adviser has fed information on the proposal to the media to get the reactions from cross sections of people.
The government functionaries who matter in decision making do enjoy the privilege of working out their own arithmetic on profit and loss of state-owned entities and making proposals for necessary upward adjustments in prices/ tariffs of fertilizers, fuel oils, gas, power, water and the like. They often feign to have sympathy for the poor consumers. But their final actions do usually go against the interest of the consumers.
Before sending the proposal for hike in gas tariff, did the ministry of energy consider even for once the possible effect of the same on the poor consumers who already have their back to the wall because of the spiralling prices of essentials?
The gas tariff was last raised on the first day of the calendar year 2005, though very marginally. The energy ministry now proposes to increase the gas tariff for power plants, fertilizer factories, captive power plants, industries, tea estates and commercial consumers by 10 per cent. But it has been rather very cruel to the users of domestic gas burners and the owners of CNG-run motor vehicles. It has proposed a tariff hike by 36 per cent for single cooking gas burner and 25 per cent for double burner. As far as CNG tariff is concerned, the proposed increase is unbelievably high-more than 76 per cent.
If the proposed hike is enforced in one-go, the consumers would be hit hard. Since most power plants and industries are now gas-based, any increase in gas tariff would prompt them to enhance the price/tariff of their products and services. Such hike will not remain limited to the proportional increase in the cost of production or services and the people may be forced to pay more for the same. It is most likely that an increase in power tariff, which was delayed earlier, would be put into effect following the increase in gas tariff. The combined effect of the two hikes will make life of the poor consumers miserable further. And if the government decides to go for yet another hike in gasoline prices soon to offset the loss suffered by the Bangladesh Petroleum Corporation (BPC), the finance adviser's expectation that the domestic inflation would come down to 6.5 per cent in the medium term and further down afterwards might prove ridiculous.
There is no denying that the government faces difficulty in budgetary management because of the distortion in prices/tariff of products and services offered by the state-owned entities. But there is one thing called timing of a decision. Should the already hard-pressed consumers be subjected to more sufferings at this point of time?
The government might be feeling good about the positive observations made by one particular multilateral lending agency. The agency concerned recently praised the government for fulfilling most conditions relating to the poverty reduction growth facility (PRGF). Indications are there that similar facility might be put in offer if the government goes for some more 'reforms' or price 'adjustments'. The policymakers do need to think deep whether they should choose to do what the donors want them to do and risk earning people's wrath over deteriorating price situation.
Moreover, proposed hike in gas tariff or prices of fuel oils runs counter to what the government has been doing to rein in soaring prices of essentials. The incumbent interim government first threatened then cajoled the traders to help rein in prices. But it has been largely unsuccessful in meeting its objective. In addition to lifting duty on many essential items, the government has tried the market intervention mechanism through the Bangladesh Rifles (BDR) that has so far produced very limited result.
Now the government is trying to involve the world's largest non-governmental organization (NGO)-the Bangladesh Rural Advancement Committee (BRAC)-to help develop an alternative to the traditional marketing channel and rein in rising prices of essentials. With its vast network across the country, the BRAC, if it at all accepts the challenge, hopefully, will try to eliminate a host of middlemen in between the growers and the consumers. This is a good move. Other NGOs having wide network might also be encouraged to take up similar job. But all these positive steps are unlikely to produce the desired results if other factors continue to fuel the price situation.
Energy adviser Tapan Chowdhury is undone. He told the media last Monday that the government was left with little option other than raising gas tariff for all types of consumption to compensate for the losses being incurred by the state-owned companies involved in the marketing of the same.
The ministry of power, energy and mineral resources has already sent a proposal for increasing gas tariff to the council of advisers for consideration. The adviser also hinted at possible hike in fuel oil prices in view of the rise in the prices of the commodity in the international market.
It is very likely that the adviser has fed information on the proposal to the media to get the reactions from cross sections of people.
The government functionaries who matter in decision making do enjoy the privilege of working out their own arithmetic on profit and loss of state-owned entities and making proposals for necessary upward adjustments in prices/ tariffs of fertilizers, fuel oils, gas, power, water and the like. They often feign to have sympathy for the poor consumers. But their final actions do usually go against the interest of the consumers.
Before sending the proposal for hike in gas tariff, did the ministry of energy consider even for once the possible effect of the same on the poor consumers who already have their back to the wall because of the spiralling prices of essentials?
The gas tariff was last raised on the first day of the calendar year 2005, though very marginally. The energy ministry now proposes to increase the gas tariff for power plants, fertilizer factories, captive power plants, industries, tea estates and commercial consumers by 10 per cent. But it has been rather very cruel to the users of domestic gas burners and the owners of CNG-run motor vehicles. It has proposed a tariff hike by 36 per cent for single cooking gas burner and 25 per cent for double burner. As far as CNG tariff is concerned, the proposed increase is unbelievably high-more than 76 per cent.
If the proposed hike is enforced in one-go, the consumers would be hit hard. Since most power plants and industries are now gas-based, any increase in gas tariff would prompt them to enhance the price/tariff of their products and services. Such hike will not remain limited to the proportional increase in the cost of production or services and the people may be forced to pay more for the same. It is most likely that an increase in power tariff, which was delayed earlier, would be put into effect following the increase in gas tariff. The combined effect of the two hikes will make life of the poor consumers miserable further. And if the government decides to go for yet another hike in gasoline prices soon to offset the loss suffered by the Bangladesh Petroleum Corporation (BPC), the finance adviser's expectation that the domestic inflation would come down to 6.5 per cent in the medium term and further down afterwards might prove ridiculous.
There is no denying that the government faces difficulty in budgetary management because of the distortion in prices/tariff of products and services offered by the state-owned entities. But there is one thing called timing of a decision. Should the already hard-pressed consumers be subjected to more sufferings at this point of time?
The government might be feeling good about the positive observations made by one particular multilateral lending agency. The agency concerned recently praised the government for fulfilling most conditions relating to the poverty reduction growth facility (PRGF). Indications are there that similar facility might be put in offer if the government goes for some more 'reforms' or price 'adjustments'. The policymakers do need to think deep whether they should choose to do what the donors want them to do and risk earning people's wrath over deteriorating price situation.
Moreover, proposed hike in gas tariff or prices of fuel oils runs counter to what the government has been doing to rein in soaring prices of essentials. The incumbent interim government first threatened then cajoled the traders to help rein in prices. But it has been largely unsuccessful in meeting its objective. In addition to lifting duty on many essential items, the government has tried the market intervention mechanism through the Bangladesh Rifles (BDR) that has so far produced very limited result.
Now the government is trying to involve the world's largest non-governmental organization (NGO)-the Bangladesh Rural Advancement Committee (BRAC)-to help develop an alternative to the traditional marketing channel and rein in rising prices of essentials. With its vast network across the country, the BRAC, if it at all accepts the challenge, hopefully, will try to eliminate a host of middlemen in between the growers and the consumers. This is a good move. Other NGOs having wide network might also be encouraged to take up similar job. But all these positive steps are unlikely to produce the desired results if other factors continue to fuel the price situation.