Bangladesh Energy Regulatory Commission (BERC) on Sunday raised the prices of gas by 22.78 percent for all users, on average despite repeated opposition voiced by the consumer rights groups.

The hiked prices are made effective from this month. In the last 13 years, gas prices have increased by 129.49 percent. The last time BERC increased the gas price was by 33pc to Tk9.80 per cubic metre in June 2019.

The decision came at a time when the gas distribution companies are already making profits with the existing price rates. But the government justified the decision to hike on the pretext of adjusting the high import price of liquefied natural gas (LNG).   

“Gas price for non-metered double burner domestic users has been increased to Tk1,080 from the current Tk975 a month. Price of a single burner will rise to Tk 990 per month from Tk 925. The household consumers have to pay Tk 18 per cubic metre (42.86 per cent rise) instead of existing Tk 12.60 per cubic metre (CM),” said BERC's acting Chairman Mohammad Abu Faruque. He was addressing virtually a press conference on Sunday.

With the latest development, the average gas price has been raised to Tk 11.91 per cubic metre from the existing Tk 9.70 per cubic metre (CM).

Except the users of CNG (compressed natural gas), all other consumers will have to pay more for the natural gas. The gas price for small industries has, however, been decreased 36.74 percent.

As per the new rate, the fertilizer sector saw the maximum hike, with the prices of each cubic foot of gas set to Tk16, seeing a 259 pc rise. Commercial consumers like hotel, restaurants and others will have to pay Tk 26.64 (15.83 per cent rise) instead of Tk 23 per CM.

“CNG consumers will have to pay at the existing rate of Tk 43 per CM while captive power plant including small and commercial power plant operators will have to pay Tk 16 per CM (15.52 per cent rise) instead of Tk 13.85. Public, IPP and Rental power plants will have to pay Tk 5.02 per CM instead of Tk 4.45 per CM,” according to the increased price.

Energy sector experts believe that the increase in gas price for power plants means it will have a spillover effect and the electricity prices will also be increased soon.

As per the announcement, the large industry owners will have to pay Tk 11.98 (11.96 per cent rise) instead of Tk 10.70 per CM while medium industry Tk 11.78 per CM (19.09 per cent rise) and small and cottage industry Tk 10.78 (36.74 per cent decrease) and the tea estates at Tk 11.93 per CM (11.50 per cent rise).

The BERC acting chairman said this new price was calculated considering the import of 645 million cubic feet (MMCFD) of LNG for the new fiscal year of 2021-22.

In January this year, Petrobangla proposed that the BERC increase the average gas price up to Tk15.30 cubic metre, while six gas distribution companies demanded an increase in the gas price up to 117 pc to Tk20.36 per cubic metre.

In the proposal, Petrobangla said the gas price needs to be increased as it has to import LNG at high prices from the spot market amid the volatile international market.

At present, only 3- 4 pc of the total 3,000 million cubic feet of daily gas supply comes from the spot LNG.  

In March, BERC held a four-day long hearing on the gas price hike proposal.

Consumers, different right bodies, and their representatives have over the past two years, repeatedly urged government not to hike gas price. Business community also voiced serious concern that hike in gas prices would push up the cost of business. They raised their voices during public hearings organized by BERC.

At the hearing, Professor Dr M Shamsul Alam, senior vice-chairman of Consumer Association of Bangladesh, said this is not justified to increase the total gas price for the 3% of the spot LNG.

"Besides, the distribution companies are all in profit and they have failed to justify price increases. Instead, we have shown that the gas price can be reduced by Tk0.16 per cubic metre," he said at the hearing.

"At present, people do not have the ability to pay the extra cost amid rising inflation," he added.

After the announcement of the new price, M Shamsul Alam said, "As always, the public hearing turned into a farce. No argumentative information was taken into account.”

It was informed at the press conference on Sunday that there will be a deficit of Tk 11,800 crore. Out of this, the government will provide Tk 6800 crore as subsidy in the upcoming budget. On the other hand, Taka 4,800 will be provided from the Energy Safety Fund and the dividends of the six distributions companies.

“The price has been increased so much that the government will not give any subsidy at the production stage. The price of gas has been increased in fertilizer as the government will provide subsidy to fertilizer.