Experts fear detrimental impact on investment

Decision illogical, says BNP

Economists and businessmen expressed concern over the proposed gas price hike, pointing out that it would have a detrimental impact on investment and industrialisation. “The hike would hinder the overall growth capacity of the country's economy,” Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president Abdul Matlub Ahmed pointed out. “Increasing the price of gas is not a solution,” he added.
He further pointed out that for industrialisation, a major challenge—apart from infrastructure development—is the sustainability of the gas supply and uninterrupted power supply. He said the export-oriented industries would face challenges to compete in the global market as production will increase. He urged the government to help the exporters to mitigate addition production costs by providing subsidies or incentives.
For the present gas-based industries, he iterated the need to ensure a continuous supply of gas and a stable pricing policy. He noted that 74 per cent of the country's energy requirements are met through natural gas. Hence, the hike in gas prices would increase the costs of investment, production and overall business activities, he added. Ensuring stable

and adequate availability of electricity, water, gas and land is crucial for attracting more investment, he said.
The proposed hike would have other impacts, such as a higher cost of living and a rise in inflation, which would ultimately affect every resident of the country, Matlub Ahmed said.
Former adviser to the caretaker government, Dr ABM Mirza Azizul Islam, said the hike in the price of gas would directly impact the economy. Production costs would increase and this would fuel inflation, he warned.
Expressing his gut reaction to the price hike of gas, he argued that it is not a permanent solution to mitigate the gas crisis.
Centre for Policy Dialogue (CPD) executive director Prof. Dr Mustafizur Rahman observed that the hike in the price of gas would directly affect consumers, particularly low-income people and the lower middle and middle classes.
However, he conceded that there was logic on part of the government to increase the price of natural gas. But the government should ensure alternative uses of gas, he added.
The government should expedite imports of liquefied natural gas (LNG) to permanently solve the gas crisis and provide sufficient gas to the industrial sector, he said.
About the domestic use of gas, he said demand should be gradually reduced and it should be provided to the industrial sector by ensuring alternative uses of gas.
Lead economist of the World Bank’s (WB’s) Dhaka office, Dr Zahid Hussain, said such frequent price hikes impact investment, as investors can hardly take any decision about future investment plans, given the unstable price of gas. He did not find any economic rationale for a hike in the gas price in view of the reduced household use of gas. Even foreign investments would be affected by an unplanned hike in the price of gas, he said, adding, “The government should reform the gas price policy instead of implementing a bureaucracy-dependent price hike.”
He also suggested the introduction of meters to monitor household use so as to increase revenues from domestic use. Dr Hussain also suggested imports of fertilisers instead of domestic production in order to reduce the use of natural gas in fertiliser production. That amount can then be used in the industrial sector, he observed. Meanwhile, terming the decision to hike the gas tariffs illogical and anti-people, the BNP yesterday urged the government to rescind it, UNB reports.
Fakhrul made the demand at an emergency press conference at BNP chairperson’s Gulshan office. He alleged that the government raised the gas prices only to indulge in widespread plundering making the country’s people hostage. “The so-called gas price hike proposal has been made to balance it with that of LPG. The decision will help boost the LPG market and benefit some businessmen close to the government,” Fakhrul said.    The BNP leader warned that the country’s people will not accept the gas price hike decision. Asked whether their party will announce any programme protesting the gas price hike, he said they will inform it later.

Experts fear detrimental impact on investment

Decision illogical, says BNP

Economists and businessmen expressed concern over the proposed gas price hike, pointing out that it would have a detrimental impact on investment and industrialisation. The hike would hinder the overall growth capacity of the countrys economy, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president Abdul Matlub Ahmed pointed out. Increasing the price of gas is not a solution, he added. He further pointed out that for industrialisation, a major challengeapart from infrastructure developmentis the sustainability of the gas supply and uninterrupted power supply. He said the export-oriented industries would face challenges to compete in the global market as production will increase. He urged the government to help the exporters to mitigate addition production costs by providing subsidies or incentives. For the present gas-based industries, he iterated the need to ensure a continuous supply of gas and a stable pricing policy. He noted that 74 per cent of the countrys energy requirements are met through natural gas. Hence, the hike in gas prices would increase the costs of investment, production and overall business activities, he added. Ensuring stable and adequate availability of electricity, water, gas and land is crucial for attracting more investment, he said. The proposed hike would have other impacts, such as a higher cost of living and a rise in inflation, which would ultimately affect every resident of the country, Matlub Ahmed said. Former adviser to the caretaker government, Dr ABM Mirza Azizul Islam, said the hike in the price of gas would directly impact the economy. Production costs would increase and this would fuel inflation, he warned. Expressing his gut reaction to the price hike of gas, he argued that it is not a permanent solution to mitigate the gas crisis. Centre for Policy Dialogue (CPD) executive director Prof. Dr Mustafizur Rahman observed that the hike in the price of gas would directly affect consumers, particularly low-income people and the lower middle and middle classes. However, he conceded that there was logic on part of the government to increase the price of natural gas. But the government should ensure alternative uses of gas, he added. The government should expedite imports of liquefied natural gas (LNG) to permanently solve the gas crisis and provide sufficient gas to the industrial sector, he said. About the domestic use of gas, he said demand should be gradually reduced and it should be provided to the industrial sector by ensuring alternative uses of gas. Lead economist of the World Banks (WBs) Dhaka office, Dr Zahid Hussain, said such frequent price hikes impact investment, as investors can hardly take any decision about future investment plans, given the unstable price of gas. He did not find any economic rationale for a hike in the gas price in view of the reduced household use of gas. Even foreign investments would be affected by an unplanned hike in the price of gas, he said, adding, The government should reform the gas price policy instead of implementing a bureaucracy-dependent price hike. He also suggested the introduction of meters to monitor household use so as to increase revenues from domestic use. Dr Hussain also suggested imports of fertilisers instead of domestic production in order to reduce the use of natural gas in fertiliser production. That amount can then be used in the industrial sector, he observed. Meanwhile, terming the decision to hike the gas tariffs illogical and anti-people, the BNP yesterday urged the government to rescind it, UNB reports. Fakhrul made the demand at an emergency press conference at BNP chairpersons Gulshan office. He alleged that the government raised the gas prices only to indulge in widespread plundering making the countrys people hostage. The so-called gas price hike proposal has been made to balance it with that of LPG. The decision will help boost the LPG market and benefit some businessmen close to the government, Fakhrul said. The BNP leader warned that the countrys people will not accept the gas price hike decision. Asked whether their party will announce any programme protesting the gas price hike, he said they will inform it later.