The Ministry of Power, Energy and Mineral Resources has announced a significant policy shift that will see industries, including the crucial ready-made garment (RMG) sector, facing much higher tariffs for gas consumption. Under a new proposal submitted by Petrobangla to the Bangladesh Energy Regulatory Commission (BERC), industrial and captive power users will be required to pay Taka 75.72 per cubic meter for gas consumed beyond their permitted load, a substantial increase from the current rate of Taka 30.75 per cubic meter.
This new pricing structure is designed to align gas tariffs with the actual cost of imported liquefied natural gas (LNG). For new industrial and captive connections, the revised rate of Taka 75.72 per cubic meter will apply immediately. The move comes as the government grapples with a fiscal gap of Taka 16,162 crore for the current fiscal year, prompting the need for increased revenues from gas sales.
The proposed pricing mechanism will be based on the average cost of LNG imports over the previous three months, factoring in operational, transmission, and distribution costs, alongside contributions to gas development funds. Additionally, a 15 per cent value-added tax (VAT) will be levied on these costs.
Business leaders have raised concerns that this new pricing structure may create an uneven playing field, particularly affecting the RMG industry, which heavily relies on gas for power. Existing industries that currently pay lower rates will be at a competitive advantage over new entrants, who will face significantly higher costs for gas. This disparity could stifle the growth of new RMG businesses, discouraging investment and innovation in a sector that is vital to Bangladesh’s economy.
In the 2023-24 fiscal year, Petrobangla reported an average price of Taka 24.38 per cubic meter for gas, while the selling price was just Taka 22.87 per cubic meter, leading to a loss of Taka 1.56 per cubic meter. With the rising costs of LNG—expected to reach Taka 71 in August 2024—industry stakeholders are concerned about the long-term implications of these changes on the RMG sector and overall industrial competitiveness in Bangladesh.
