Tuesday, September 1, 2015

Energy for revenue


To ensure energy security, the recent power and gas price hike by the government has received criticism from stakeholders, the opposition as well as some of the ruling party itself.

Gas price has been increased by 26.29%, which brings a double burner stove use to Tk 650 a month. The decision was to generate revenue from natural gas, amounting to Tk 34.05 bn a year, with aims at full utilization and “not to increase profitability” by the energy regulator. The purpose of the rise would be ensure the allocate more to the Gas-development fund (GDF), which would be used to import pricy re-gasified LNG by 2017 to meet upping demand. The fund provides infrastructural backing for oil and gas exploration. 


Power price, which was increased by 2.93%, have been slammed as unjustified given the declining price of oil internationally, whereas at the same time, the government is receiving electricity cheaply from furnace oil utilizing private power companies. Many who have been given the permission to import fuel can do so at around Tk 32 a litre where, government supply of furnace oil to some companies are at Tk 62 a litre. Thus, power prices from these firms are Tk 16-17 rather than Tk 10. However, electricity production cost is rather cheap for some producers at Tk 6 per unit and falling.


It was protested that the power regulators are government’s puppets and largely anti-people. Most visualize these hikes as people burdening, whereas some policy analysts speak of dampening inflation and the burden being not great if oil prices were reduced simultaneously. However, industry owners are dreading a loss of competitiveness globally, with already registering dear export statistics.

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