The Bangladesh Energy Regulatory Commission (BERC) has hiked gas prices for new industries and captive power plants by 33 percent. As a result, gas used in industrial boilers now costs BDT 40 per cubic meter, up from BDT 30, and for captive power plants, the rate has increased from BDT 31.50 to BDT 42. This sudden hike has left business owners and industrialists worried. They fear it could discourage new investments and shrink industrial expansion.

Many point out that factories already struggle with frequent gas shortages throughout the year, affecting production. With the recent price hike, they say, things could get even worse. Even the government’s efforts to attract foreign investors might take a hit.

According to BERC’s announcement made on April 13, the new prices took effect immediately. From now on, any newly approved gas connections will be charged at the higher rate. Those who already received demand notes for connections earlier will also have to pay the new rate if their usage exceeds 50 percent. Existing industries will only need to pay the new rate for usage beyond their approved load.

When asked whether this price hike might hurt new investments, BERC Chairman Jalal Ahmed said, “It’s too early to say if investment will go down. We’ll be keeping an eye on whether new investors feel discouraged. If they think it’s still viable, they’ll come. They might also turn to alternative fuels.”

However, BERC failed to give a clear explanation for the hike. The BERC Chairman said the demand for gas has increased, and the government is importing more LNG to meet that demand. “Petrobangla is under pressure due to the rising cost of LNG,” he explained. “They had actually proposed a 150 percent price hike during the public hearing. But most participants opposed that. We tried to keep consumers in mind and settled on a 33 percent increase.”

Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), shared his concerns with Bonik Barta, “This price hike creates uncertainty for entrepreneurs investing in new industries. It sends the wrong message to foreign investors. They may no longer be interested. But the one bit of relief is that the government didn’t raise prices for existing connections.”

Natural gas is a key raw material in the ceramic industry. Due to limited supply, many producers are already on the verge of shutting down. Some are even defaulting on bank loans and exiting the sector. Now, with higher prices for new gas connections, industry insiders fear losing the edge in both local and global markets.

Moynul Islam, President of the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), told Bonik Barta that with this gas price hike, gas-based industries in the country will struggle to survive—let alone grow. “We’ll see more loan defaults. Our entrepreneurs are already losing ground in both local and global markets due to unreliable gas supply. So how can we even think about fresh investments in this situation?”

He further said, “If we want to keep the ceramic industry afloat and make it sustainable, the government must ensure uninterrupted gas supply—just like they do for the KAFCO fertilizer plant or factories in the EZs and EPZs. Interest rates need to come down. The government should also subsidize the ceramic sector, reduce taxes, and increase export incentives. If the right steps aren’t taken now, the ceramic industry could end up like the carpet, sugar, or paper industries—weak and struggling. I just don’t understand why we shouldn’t get the same benefits offered to foreign investors.”

BERC held a public hearing on February 26 regarding Petrobangla’s proposal to increase gas prices. Petrobangla argued that without a price hike, it would face an annual deficit of nearly BDT 160 billion. But the proposal sparked criticism. Business leaders and industry associations strongly opposed the move during the hearing. They especially rejected the idea of having two separate gas rates—one for old industries and another for new ones—saying it would create unfair competition.

Dr. Shamsul Alam, energy adviser at the Consumers Association of Bangladesh (CAB), told Bonik Barta, “In the hearing, we showed that prices could actually be reduced. But BERC still raised them. Just like the previous government, this one is also leaning toward wasteful spending. There was no proper evaluation. BERC is no longer acting in the public’s interest. It’s becoming an enemy of the people.”

Mohammed Jahangir Alam, Chairman of Crown Cement PLC and Managing Director of GPH Ispat Ltd, was also critical of the move. Speaking to Bonik Barta, he said, “The previous government raised gas prices by up to 300 percent. We’ve been struggling to cope with that ever since. After this government came in, they held a public hearing. We had proposed a rate of BDT 21 to BDT 22 per cubic meter for industries. But now they’ve raised it to BDT 40. That’s like signing a death warrant for our industry.”

When asked how this might impact the country’s investment climate, he said, “On one hand, we talk about attracting investment, and on the other, we’re hiking gas prices. How does that add up? What was the point of the public hearing then? This decision is self-defeating. If gas prices go up like this, product prices will go up too. But there’s going to be no one to buy those.”

Emphasizing what the industrial sector really needs, he added, “The government should first provide energy subsidies to support industrial growth. Once the industries grow, they can easily recover that money through VAT and taxes.”

Back in January 2023, gas prices for industries were increased by 150 to 178 percent, with the per-unit cost set at BDT 30 for industrial and captive use. Later that year, captive prices were raised again to BDT 31.50. But despite these hikes, factories in Dhaka’s Savar, Narayanganj, Gazipur, and Narsingdi still are not getting enough gas to meet demand. Production in some places has dropped by as much as 40 percent. Due to low gas pressure, many factories are running intermittently or have stopped altogether. Even though some industries have their own gas-based captive power setups, many cannot keep them running because of the shortage. This is resulting in major financial losses for entrepreneurs.