Govt mulls hike in power, gas tariffs to avoid adverse impact on next budget

The government mulls over an upward adjustment to electricity and gas prices to cut state subsidy burden as global energy price puts an adverse impact on upcoming budget.
Admitting the situation, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said on Saturday, "There is no alternative but to adjust the price of electricity
and gas."
Earlier, analyzing the impact of the global price escalation and present energy tariff, the ministries concerned suggested the government to increase electricity and gas tariffs immediately to manage the situation.
Accordingly, the gas and utility agencies have submitted their price hike proposal to the Energy Regulatory Commission (ERC) but the government high-ups were reluctant.
"We want to adjust the price in that manner thus it would be at the tolerant level of the mass people, they would not feel any adverse situation as we are considering the hike," Hamid told some journalists at a zoom meeting.
"The Finance Ministry gave a subsidy of Tk 6,000 crore for importing liquefied natural gas in 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," he said.
According to him the subsidy for electricity, gas for public consumption has been mounting, and unless the prices are adjusted immediately, the volume of subsidy will become unaffordable. An official said interest payment and subsidy remain
as main challenges for the government this year.
He discussed the last price hike and its impact on inflation. Average inflation may rise to 5.6 per cent this year while the International Monetary Fund recently said that rate could go up to 5.8 per cent creating pressure on common people, the meeting noted.
"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.
The government readjusted the price of diesel and kerosene by 23 per cent in November, 2021 following a global price spiral since July.