Industrialists in the country have remained concerned even seven months after the fall of the fascist government following a massive uprising. Throughout the last few years, the high dollar exchange rate against the local currency has driven up the cost of raw material imports while industrial production has declined. Additionally, businesses have long complained about the insufficient supply of dollars from banks, even at higher prices.
Currently, dollars are unavailable in banking channels for less than Tk 122, while the exchange rate has reached Tk 125 per dollar in non-banking channels.
Moreover, the upcoming summer season has also raised concerns among industrialists about potential load shedding. Adding to these worries is the proposed increase in gas prices, leaving industrialists in a state of constant uncertainty.
According to entrepreneurs, political turmoil in the country has made the industries uncertain. Now, the uncertainty surrounding the national elections has worsened the crisis. Many investors have halted their investments until an elected government assumes a role. However, major political parties have feared about whether the elections will take place on time, which created more negative impacts on the industrial sector and the overall economy.
Gas price hikes could devastate industries
Showkat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), stressed the need for research on how to reduce gas prices. He pointed out that a small group in the previous dictator government was eager to buy gas from the spot market to earn commissions, and some of them are still earning from abroad.
“If gas prices are not reduced immediately, the industrial sector will not survive. However, even under the interim government, the BERC [Bangladesh Energy Regulatory Commission] is considering raising gas prices,” he remarked.
According to the latest data from the Bangladesh Bureau of Statistics (BBS), the contribution of the manufacturing sector to the country's economy has declined significantly over the past decade.
Preliminary results from the 2024 census showed that industries contribute 8.77 per cent to the economy, down from 11.54 per cent in 2013. Consequently, employment opportunities have also been reduced.
Masrur Riaz, chairman and CEO of the private research organisation Policy Bangladesh, warned that doubling gas prices in the current challenging economy would increase production costs, reduce competitiveness, and hinder new investments. It would also increase dependency on imports in the cement, steel, and ceramics sectors. Riaz pointed out that higher imports would require more foreign currency.
Additionally, rising gas prices could force many industries to shut down, which will exacerbate the number of loan defaults. He urged the government to not increase gas prices in these circumstances.
Proposed gas price hike and government justification
It has been reported that the government has proposed increasing the gas price for industrial boilers and captive power generators to Tk 75.72 per cubic meter. Currently, the price is Tk 30 per cubic meter for boilers and Tk 31.50 for captive power.
The government argues that raising gas prices is necessary to cover the massive subsidy required for importing liquefied natural gas (LNG) this year. The country currently has a demand of 4,000 million cubic feet of gas per day. The domestic gas fields supply half of them. An additional 25 per cent is imported every year, which requires heavy subsidies. Moreover, the International Monetary Fund (IMF) has been pressuring the government to eliminate energy subsidies entirely.
However, due to strong protests during public hearings, the government has not been able to make a final decision on the gas price hike.
Translated & edited by Fariha Nowshin Chinika
