Steel makers warn against further power price hike

Sector fears factory closures, job losses, infrastructure slowdown

FE REPORT | Published: May 19, 2026 22:28:21

Bangladesh's steel manufacturers on Tuesday warned that any further increase in electricity prices could push many factories towards closure, worsen unemployment and severely disrupt the country's infrastructure development activities.
The warning came at a press conference organised by the Bangladesh Steel Manufacturers Association (BSMA) at the Economic Reporters' Forum (ERF) in the capital, where the association also placed an eight-point charter of demands before the government and the Bangladesh Energy Regulatory Commission (BERC).
Speaking at the briefing, BSMA President Mohammad Jahangir Alam said the steel industry was already under severe pressure due to rising energy costs, unstable business conditions and declining industrial demand.
"We are fighting for survival. Any further increase in energy prices will become unbearable for industrial operators," he said, urging the government to intervene immediately to protect the sector.
Among others, Salam Group Chairman Md Rezaul Karim, BSMA founder president and Managing Director of Shahriar Steel Mills Ltd Sk Masadul Alam Masud, and Managing Director of Chakda Steel & Re-Rolling Mills (CSRM) Pvt Ltd Md Shahjahan also addressed the press conference.
According to BSMA leaders, gas prices have increased by nearly 300 per cent while electricity tariffs have risen around 30 per cent over the past few years, placing enormous pressure on manufacturers.
The association demanded an immediate freeze on industrial electricity tariffs, saying the sector was no longer capable of absorbing additional costs.
Manufacturers also urged the authorities to reduce what they described as unreasonable demand charges and excessive VAT imposed on industries.
The BSMA called for a review of the existing power factor penalty system, alleging that it acts as a hidden financial burden on factories.
The association further demanded a phased withdrawal of the capacity charge mechanism, claiming that more than Tk 500 billion is paid annually to power plants under the system, creating significant pressure on the economy.
"Many factories are operating at only 40 per cent of their installed capacity despite being built for much higher production," Mr Alam said.
He added that a worsening liquidity crisis, shortage of long-term financing, high bank interest rates and weak construction demand had further weakened the sector.
The association also proposed separate industrial tariff facilities for factories receiving electricity directly through 33kV, 132kV and 230kV transmission lines, arguing that such consumers create minimal system loss for the state.
In addition, BSMA demanded interest payments or adjustment facilities against large security deposits kept by utility providers for years without compensation.
The association also criticised current utility billing practices, saying factories continue to pay high demand charges despite investing heavily in their own substations while still receiving unstable electricity supply.
BSMA Secretary General Dr Sumon Chowdhury said many factories were already under financial stress due to higher bank interest rates, previous energy price hikes and weak market demand.
"Electricity accounts for nearly 30 per cent of steel production costs, making the sector highly vulnerable to any further tariff increase," he said.
There are currently 35 active steel mills under the association.
rezamumu@gmail.com