The Ministry of Power, Energy, and Mineral Resources has announced a major policy shift that will significantly increase gas tariffs for industries, including Bangladesh’s critical ready-made garment (RMG) sector. Under a new proposal from Petrobangla to the Bangladesh Energy Regulatory Commission (BERC), industrial and captive power users will pay Taka 75.72 per cubic meter for gas consumed beyond their permitted load—a steep rise from the current Taka 30.75 per cubic meter.
This adjustment aligns tariffs with the actual cost of imported liquefied natural gas (LNG). For new industrial and captive connections, the revised rate will apply immediately, as the government seeks to close a Taka 16,162 crore fiscal deficit for the current year through increased gas revenues.
The proposed pricing will reflect the average LNG import costs over the prior three months, incorporating operational, transmission, and distribution expenses, along with gas development fund contributions. Additionally, a 15% value-added tax (VAT) will be added to these costs.
Business leaders have raised alarms about the impact on the RMG sector, which heavily depends on gas for power. They argue the new tariffs could create a competitive imbalance, as existing industries paying lower rates would gain an advantage over new entrants, who face significantly higher costs. This disparity risks discouraging investment and stifling growth in a sector vital to Bangladesh’s economy.
In the 2023-24 fiscal year, Petrobangla reported an average gas price of Taka 24.38 per cubic meter, while the selling price was Taka 22.87 per cubic meter, resulting in a loss of Taka 1.56 per cubic meter. With LNG costs expected to hit Taka 71 by August 2024, industry stakeholders are concerned about the long-term consequences for the RMG sector and the broader industrial landscape.
