Don't trigger inflation by raising gas prices

There had been murmurs for several months that gas prices would rise. Due to a gas shortage, many industries had to shut down last winter. Small and medium-sized factories lacked the confidence to invest. The government and industrialists held many discussions over the matter. Yet, without resolving the gas crisis, the government has increased gas prices by 33%. On Sunday (April 13), the Bangladesh Energy Regulatory Commission (BERC) announced the new prices during a press briefing. There is no doubt that this price hike will fuel inflation.

Naturally, the increase in gas prices will raise production costs for both goods and electricity, and this burden will ultimately fall on consumers. Businesses will recover their costs by increasing product prices. In fact, product prices are likely to rise disproportionately compared to the gas price hike.

According to newspaper reports, the gas prices were raised despite strong objections from consumer and business representatives. For new industries, the price was increased by 33%, meaning an additional 10 taka per unit. Existing industries will also have to pay more if they use more gas than their approved load. Promised industrial consumers will face extra charges if they exceed 50% of their approved load.

Recently, the “Bangladesh Investment Summit 2025” was held in the country. Many foreign companies pledged to invest in Bangladesh, and some even signed agreements. In this context, how logical is the gas price hike? Raising gas prices seems to have put domestic investors at risk. The readymade garments industry, which is heavily dependent on gas, along with many factories that run their own power plants using gas, will not only be discouraged but may actually halt new investments. For many, shutting down existing factories might not be surprising either.

With this sudden gas price hike, the government seems to have discouraged local investment. Petrobangla stated in its proposal that without a price hike, there would be a deficit of around 160 billion taka annually. Now, many industrial enterprises are considering alternative fuels. But BERC has failed to explain how this gas price increase will impact the broader economy. Even though prices were raised, they couldn't provide a logical justification. The commission doesn't even know how much additional revenue the government will earn from this price increase. Generally, BERC determines the required revenue for companies, then adjusts prices based on government-announced subsidies. When asked what the hike was based on, the BERC chairman said that if they had calculated the actual revenue demand, prices would have risen much more. So, to keep it bearable for consumers, a 33% increase was made. No subsidy was factored in. When asked if the decision was made based on recommendations from the Ministry of Power, Energy, and Mineral Resources, he said it was not done based on any ministry prescription.

This implies that there was room for further discussion and consideration before increasing gas prices. Due to this increase, the prices of many goods will rise. The recent progress the government made in controlling inflation might now unravel. It will negatively impact the daily lives of ordinary people. Therefore, we urge the government to reconsider this decision to raise gas prices.