Following strong resistance from the business community against a proposed 152% gas price hike for new industrial factories, the Energy and Mineral Resources Division is now contemplating a broader revision encompassing all sectors.
Reliable sources confirm that discussions on a revised pricing model are currently underway at the highest levels of decision-making.
The revised proposal includes increasing gas prices to Tk40 per cubic metre for both new and existing industries and Tk42 per cubic metre for captive power generation.
This would mark a substantial rise from the current rates of Tk30 and Tk31.75, respectively.
Previously, Petrobangla and distribution companies had proposed raising gas prices to Tk75.72 per cubic metre exclusively for new industries and expanded industrial loads, with a regulatory hearing scheduled for 26 February by the Bangladesh Energy Regulatory Commission (BERC).
While the specifics of the new approach remain unclear, industry insiders speculate that a supplementary proposal may surface before the hearing or be presented orally during the proceedings.
There is also a possibility that BERC may receive special directives regarding the matter.
Critics of the across-the-board price hike argue that the proposed formula by the Energy and Mineral Resources Division will not suffice to bridge the financial gap.
According to Petrobangla, the current import cost of liquefied natural gas (LNG) stands at Tk65.70 per cubic metre, which rises to Tk75.72 when VAT, taxes, and other charges are factored in.
The company estimates that importing 101 LNG cargoes in the current fiscal year would lead to a deficit of approximately Tk16,161.71 crore, while 115 cargoes would push the shortfall to Tk22,315 crore.
Revenue from increased gas prices in new industries would not materialise until two years after implementation, while additional earnings from existing users with expanded loads would be modest.
Petrobangla data (November 2023–October 2024) indicates an annual consumption of 205 million cubic metres of gas.
If the proposed rate of Tk45 per cubic metre is implemented, the projected additional revenue would amount to Tk922 crore.
Under Petrobangla’s proposed model, pre-approved industrial consumers would be charged half their bill at the current rate and half at Tk75.72 per cubic metre.
This category includes industries with a committed load of 310 million cubic metres and captive power users consuming 290 million cubic metres.
With 300 million cubic metres billed at the higher rate, the additional revenue is estimated at Tk1,350 crore, bringing the total projected earnings from both segments to Tk2,300 crore.
However, this remains significantly lower than Petrobangla’s estimated deficit of Tk16,000–22,000 crore, reinforcing speculation that the price hike may extend to all industries.
When contacted, Petrobangla Chairman Rezanur Rahman stated that he was unaware of any changes beyond the submitted proposal, which focuses on price increases for new industries and expanded industrial loads.
He noted that the matter is now under BERC’s jurisdiction.
BERC Chairman Jalal Ahmed also denied knowledge of any additional proposals.
Energy and Mineral Resources Division Secretary Mohammad Saiful Islam was unavailable for comment, as he neither answered phone calls nor responded to text messages.
On 6 January, Petrobangla proposed raising gas prices for new industrial boilers and captive power generators from Tk30 and Tk31.75 per cubic metre to Tk75.72, while keeping tariffs unchanged for existing consumers.
Additionally, pre-approved consumers were to be billed at a split rate, with half of their consumption charged at the current price and the remaining at Tk75.72.
The abrupt and steep increase has left distribution companies uncomfortable, as they find the rationale behind a 152% hike unjustifiable.
Senior officials from multiple distribution companies, speaking on condition of anonymity, have criticised the move, alleging that Petrobangla is attempting to pass the burden onto them.
“Petrobangla is using us as a shield to push for higher prices, but we will have to face the public during the hearings. We do not agree with this price increase, but we had no choice but to submit the proposal as per the ministry’s directive,” one official remarked.
BERC has formed a technical committee to scrutinise Petrobangla’s pricing proposal, with the final decision set to be made through public hearings.
Currently, gas is procured from state-run Sylhet Gas Fields Company Limited at Tk1 per cubic metre, Bangladesh Gas Fields Company at Tk1.25, and BAPEX at Tk4.
The blended rate, including purchases from multinational corporations such as Chevron Bangladesh and Tullow, averages Tk6.07 per cubic metre.
Petrobangla has justified its price hike proposal by citing declining domestic gas production, which has disproportionately affected industrial and captive power users.
Presently, domestic gas fields supply 75% of the country’s demand, with the remaining 25% met through LNG imports.
This import dependency is expected to rise significantly, with projections indicating that LNG will constitute 75% of total gas supply by the 2030–31 fiscal year.
Hatem Ali, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), has warned that approving the proposal would stifle industrial growth.
“This move will create an uneven playing field, discouraging new investments. How can businesses compete when some pay Tk30 per cubic metre while others pay Tk75? The market does not differentiate between them,” he said.
With the regulatory hearing on the horizon, the fate of industrial gas tariffs remains uncertain, but the prospect of sweeping price hikes is growing ever more likely.