Amid oil shock, 100% gas price hike in the making

Hovering fuel costs threaten to push up utility payments for home and industrial customers

State-owned liquefied pure fuel distributors have proposed elevating retail charges by as much as round 100%, in response to high officers on the power value regulator.

The spiked costs might mount up stress on individuals additional who’ve already been struggling to manage up with current diesel value hikes. In addition to, industries that burn fuel of their manufacturing items would face a bump of their pandemic restoration patch.

However the fuel corporations say their value hike transfer is to regulate with the inflated importing charges, plus to calibrate the federal government energy subsidy and spending hole.

If the proposal is accepted, customers must pay Tk19-20 per cubic metre of fuel, whereas the present fee is Tk9.80, in response to sources on the Bangladesh Power Regulatory Fee (BERC).

They stated the fuel distribution corporations – Petrobangla and its subsidiaries – submitted the proposals to the BERC final week, whereas the Bangladesh Petroleum Exploration and Manufacturing Firm (Bapex) needs to extend its manufacturing value by greater than 48%.

“We now have acquired functions from Petrobangla and a few distribution corporations. However we’ve got not acquired such proposals from any producer,” Md Maqbul-E-Elahi Chowdhury, member (Gasoline) at BERC, advised The Enterprise Commonplace.

However a Bapex supply confirmed to The Enterprise Commonplace in regards to the firm’s 48% manufacturing value hike proposal.

Other than elevating the retail value, a Titas Gasoline official stated they’ve additionally demanded doubling the distribution cost. At current, Titas will get Tk0.25 for supplying per cubic metre of fuel to the customers, nevertheless it demanded to extend the margin at Tk0.50.

At current, Bapex will get Tk3.04 for producing per cubic foot of fuel.

With the instruction of the Power and Mineral Assets Division of the Ministry of Energy Power and Mineral Assets, the fuel manufacturing and distribution corporations have marched for the value hike, in response to Petrobangla sources.

Presently, Petrobangla imports per million British thermal unit (MMBTu) of liquefied pure fuel at $11.5 underneath a long-term contract with international suppliers.

To fulfill the native demand, the federal government additionally purchases fuel from the worldwide spot market. A supercharged worldwide demand following economies reopening final 12 months, Bangladesh imported LNG at $36 per MMBtu from the spot market in October 2021 and obtained value quotes as excessive as $51 from a provider.

As a result of pricier imports and gross sales at a decrease fee to home customers, the federal government faces an enormous value hole and extra dependency on energy subsidies.

The Power and Mineral Assets Division just lately stated some Tk70,000 crore can be wanted this 12 months to offer subsidies in fuel, electrical energy and fertiliser.

However the Finance Division stored apart solely Tk12,000 crore within the present fiscal 12 months for the aim.

A Petrobangla official stated the state-owned entity faces a Tk17,000 crore hole in fuel import, which may very well be minimised if the authorities allowed them to move by means of the duties and taxes.

The final fuel tariff was introduced in July 2019, when the BERC elevated the majority fuel value by 32.8% to Tk9.80 per cubic foot from Tk7.38.

Yet another headwind for industries

Already grappled with a global provide chain disruption and uncooked materials hikes, industries say pricier fuel would jeopardise their pandemic restoration.

“Bangladeshi companies will lose their competitiveness within the worldwide market if fuel costs are doubled,” Mohammed Amirul Haque, managing director of Premier Cement, advised The Enterprise Commonplace.

The cement-maker stated they’re dealing with Covid-led manufacturing delays, uncommon rises in uncooked supplies and manufacturing value.

“If the value of fuel doubles, the damaging influence on enterprise would double as nicely,” he commented.

Based on Aameir Alihussain, managing director of the nation’s largest steel-maker BSRM, doubling the fuel value is not going to be encouraging to native entrepreneurs in overcoming the pandemic fallout.

“It’s ultimate to not enhance the fuel value throughout the pandemic. If there are not any choices left, the federal government might have raised the value steadily. However rising the charges at one go shouldn’t be cheap,” he commented.

“How would we do enterprise if such pressures maintain coming from all corners,” he questioned.