No more delays in the name of reforms—Control inflation

The leaders of the top four business organizations in the country have expressed their concerns regarding the government's initiative to increase gas prices in a joint letter addressed to the Energy Adviser. They have warned that raising gas prices at this moment will severely impact industries, leading to a sharp rise in production costs. As a result, Bangladeshi products may lose their competitive edge in the international market.

In their letter, the business leaders pointed out that gas prices have increased by 286% in the past five years, electricity prices by 33.5%, diesel prices by 68%, and bank loan interest rates have risen to 14-15%. Additionally, in 2023, workers’ wages were increased by 56%, and in December 2024, the annual salary increment was raised by 9%. Despite paying higher prices, industries are still not receiving an adequate gas supply, leading to factory shutdowns in various parts of the country and a decline in production. If this trend continues, key sectors like the ready-made garments (RMG) industry may face a severe crisis.

However, the business community is primarily concerned about their own interests. They have failed to mention the hardship of ordinary citizens, who will suffer further from increased inflation due to rising fuel prices.

Bangladesh’s Energy Crisis and Lack of Exploration

Bangladesh relies on four main sources of energy: fuel oil, electricity, gas, and coal. Although the country produces electricity, the supply is insufficient to meet demand. Coal is available in limited quantities but is discouraged globally due to environmental concerns. Natural gas is the country’s most significant energy source, but its reserves are depleting rapidly.

Instead of prioritizing local gas exploration and production, the government has been focusing on importing liquefied natural gas (LNG) from abroad. A recent agreement with the United States for LNG supply is a clear example. However, rather than relying on expensive imports, the government should urgently invest in gas field exploration and extraction.

Like other delta regions, Bangladesh is expected to have substantial gas reserves. Unfortunately, both onshore and offshore gas exploration efforts have been neglected. After gaining its maritime boundary through international arbitration, Myanmar and India started gas exploration in their respective territories years ago. Myanmar has already discovered 12 gas fields, and India has also identified several. In contrast, Bangladesh has failed to initiate any significant exploration in its maritime zone. Who is responsible for this failure?

So far, 28 trillion cubic feet (TCF) of gas has been discovered in Bangladesh. Of this, 20 TCF has already been consumed, leaving only 8 TCF in reserve. At the current consumption rate of 1 TCF per year, these reserves will last only eight more years unless new gas fields are discovered.

The previous government showed little interest in domestic gas exploration, focusing instead on LNG imports. This flawed policy created opportunities for corruption in the energy sector, allowing certain groups to profit through high-commission LNG imports. If domestic gas production had been expanded, it would have been far more cost-effective, but that would have limited opportunities for illicit financial gains.

Controlling Inflation: The Government’s Biggest Challenge

One of the biggest challenges for the interim government is controlling high inflation, which has been driven in part by unreasonably high energy prices.

Bangladesh imports all its fuel oil, and its price is linked to the global market. In the past, the government raised domestic fuel prices by 42%, citing rising international prices. However, despite global oil prices recently dropping to $65 per barrel, domestic prices have not been adjusted accordingly.

Many argue that the Bangladesh Petroleum Corporation (BPC) operates at a loss, making price hikes unavoidable. But why is BPC incurring losses? Should taxpayers always bear the burden? Ordinary consumers do not receive fuel for free, so why should they pay for institutional inefficiencies?

If the government can provide subsidies to the agriculture sector, it can certainly increase subsidies for fuel to stabilize inflation. Without bringing energy prices within an affordable range, controlling inflation will be nearly impossible.

Who Is Behind the Price Hikes?

People want lower prices for essential goods, but inflation remains high. Previously, government-backed syndicates were blamed for market manipulation. However, many of those syndicate leaders have fled or been jailed. So who is controlling prices now?

Some argue that inflation is driven by rising global prices. However, Bangladesh imports only 25% of its domestic demand—the remaining 75% is locally produced. So why are prices still skyrocketing?

Many officials claim that inflation is a result of the previous government's policies, but what measures have been taken to reverse this trend? Even if it is difficult to control inflation in the short term, the government should at least demonstrate visible efforts to address the crisis.

People do not expect the government to provide them with free food every day. However, they do expect to be able to afford basic necessities when they go to the market.

Urgent Action Required

Alongside inflation, the law-and-order situation in the country is deteriorating. A government’s popularity often suffers due to high inflation and poor security. The interim government must take immediate steps to reduce inflation and restore public confidence. Otherwise, the consequences could be severe.

M. A. Khaleq: Retired banker and economic analyst.