Ministries want gas, power tariff hike

Global energy price and government subsidy in power sector would put an adverse impact on upcoming budget, experts feel.
Analysing the impact of the global price escalation and present energy tariff (electricity and gas) in domestic market, officials of the Finance Ministry, Planning Ministry and Ministry of Power, Energy and Mineral Resources suggested the government to increase the tariff of electricity and gas to manage the situation.
"The Finance Ministry gives a subsidy of Tk 6,000 crore for importing liquefied natural gas for 2021 but as per initial estimation, Tk 20,000 crore to Tk 25,000 crore in subsidy is required to keep the gas price at the current level," a senior official of the Power, Energy and Mineral Resources Division said.
The import cost of LNG is now Tk 56 per cubic meter, so the average cost of per cubic meter of gas has jumped to Tk 23 from Tk 12 previously.
Earlier, it cost Tk 250 crore to bring a cargo of LNG, which is blended
with the locally produced natural gas before distribution. Now we have to pay Tk 1,250 crore to bring a cargo of LNG, the official added.
Pointing his finger to electricity, the official said the government may need to give about Tk 20,000 crore as an electricity subsidy if the price would remain same.
Since November last, officials of different ministries including Planning, Finance and Power, Energy and Minerals Resources met to analyse the impact of the global price escalation on the budget and closely monitoring the situation.
"If the price of electricity and gas were to remain the same it would need huge subsidies, which the government might not be able to afford," Power Division official said.
"Managing such huge amounts of additional funds is now a big concern as there are many other crucial issues like procurement of vaccine, incentive packages for different groups including other regular issues," official said.
Government readjusted the price of diesel and kerosene by 23 percent in November, 2021 following a global price spiral since July.
"If the government will hike the tariff of electricity and gas, it would increase the production costs and fuel inflation further," CAB energy adviser Dr. M Shamsul Alam said.
Meanwhile, the Finance Ministry observed that the impact of the fuel price hike on both food and non-food inflation may last only three months.
Earlier, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said that the government would adjust fuel prices as soon as prices fall in the global market.
"Fuel price was also reduced in 2016. Now the price has been adjusted due to price hike in international market as well as for stopping smuggling," he said.