Business & Economy

Bangladesh raises gas prices amid fears of a fresh spike in inflation

Dhaka, Jan 18 (EFE).- Bangladesh increased the retail price for piped gas for industrial use and power production by up to 179 percent on Wednesday, raising fears of more inflation.

The energy ministry said from Feb.1, power producers would have to pay Taka 14 (0.13 cents) for a cubic meter of gas, up from the previous price of Taka 5.02 (0.05 cents).

The gas price for captive power producers and all industrial units was set at Taka 30 (0.29 cents) per cubic meter, up 88 percent to 155 percent from their respective previous prices.

Gas prices for households, the tea industry, compressed natural gas, and fertilizer factories were kept unchanged.

The new gas price comes just five days after the government raised retail power prices by 5 percent on Thursday.

Economists and consumers said the hike might further increase inflation.

Inflation jumped to 9.52 percent in August from 5.54 percent during the same period in 2021 after the authorities raised the fuel price by almost 51 percent that month.

Inflation remained consistently high at 9.10 percent in September, 8.91 percent in October, 8.85 percent in November, and 8.71 percent in December, according to the Bangladesh Bureau of Statistics.

“In recent negotiations with the government, businesspeople hinted that they would pay the higher price if uninterrupted gas supplies were guaranteed. But there is no guarantee of ensuring uninterrupted gas supply,” Khondaker Golam Moazzem, Research Director of the independent think-tank Centre for Policy Dialogue, told EFE.

“The government might have thought of increasing supply by importing extra amounts of LNG. But to import extra LNG, it needs dollars, which are scarce at the moment. So there is doubt about how LNG supply would be approved,” added the economist.

Bangladesh is currently negotiating with the International Monetary Fund (IMF) for a $4.5 billion credit plan after the country’s foreign exchange reserves dropped to $33.748 billion in December 2022 from $46.154 billion a year earlier.

Ghulam Rahman, president of the Consumer Association of Bangladesh, said users might have to bear the cost of the extra gas price unless the supply of it does not improve for industries.

“We are afraid businessmen will raise the price of many locally manufactured products, fueling inflation further,” he said.

“But if the government can ensure uninterrupted supply, the price hike might remain limited to a tolerable level.” EFE


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