Industry cries foul as Bangladesh hikes gas price

by Apparel Resources

02-July-2019  |  3 mins read

Readymade Garment Industry
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Bangladesh on Sunday raised the prices of gas. For industrial use, price has been increased by 37.88 per cent from Taka 7.76 to Taka 10.70 per cubic metre while for captive power it has been increased by 43.97 per cent from Taka 9.62 to Taka 13.85.

The Bangladesh Energy Regulatory Commission (BERC) has increased the gas prices eight times in the past 10 years. As to the latest hike, BERC said the price had to be increased as country’s gas generation, distribution and transmission companies called for it because of a rise in gas production price due to import of liquefied natural gas.

This move by the Government has invited sharp criticism from industrialists, especially those involved in the business of fabric and readymade garment manufacturing. They said the hike in gas tariff would hurt the country’s manufacturing sector and the sector’s productivity would fall.

According to industry insiders, the latest gas price hike may not push up the electricity price at the moment, but the move will hit industrial sectors, including textile spinning and readymade garments as their production cost will rise significantly.

“The latest spell of gas price hike will have a negative impact on the spinning and textile sectors because of the rise in production cost. Millers would have to spend Taka 7 as gas bill for producing each kilogram of yarn. This means the cost would increase to 10 per cent from current production cost of 7 per cent,” pointed out the President of Bangladesh Textile Mills Association (BTMA) Mohammad Ali Khokon while adding that although gas prices have gone up, the buyers are not ready to pay high prices for yarn, and as such the textile millers and spinners would have to go through difficult times.

“Similarly, the gas price hike will impact the dyeing industry as it consumes gas. The dyeing cost of production for 1 kilogram of fabric will go up to 8 per cent from 5 per cent,” explained the BTMA President.

Meanwhile, reacting to this hike, the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Rubana Huq, maintained that the gas price hike would be another blow to the competitiveness of apparel and textile sector as the sector was struggling for survival.

“On the basis of the information I have, gas bill will take up around 1.5 per cent of the manufacturing cost. So 38 per cent increase in gas price means almost 1 per cent increase in production cost. This may not sound much in terms of percentage, but for an industry struggling for every penny this will be another blow,” said the BGMEA President.

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