Businesses, especially small and medium enterprises, would be hit hard for the latest hike in electricity tariff rates as their production cost would skyrocket and erode competitiveness in the global markets, said business people.
They demanded that the government changed its decision to keep industrialization stays afloat.
On Thursday, Bangladesh Energy Regulatory Commission (BERC) again increased the prices of electricity for retail consumers by 5.3% to Tk7.13 per unit and bulk consumers by 8.4% to Tk5.17 a unit. The new prices will be effective from Sunday.
“Price hike of utility services always adversely impacts the business community. Definitely, the new electricity tariff will affect business margin, especially for those of small and medium enterprises as their production cost will go up beyond their capacity,” Shams Mahmud, President of Dhaka Chamber of Commerce and Industry told Dhaka Tribune.
These types of businesses were going through a tough time amid reduction of export orders and profit margins, he added.
Economists said the latest hike in electricity prices would put manufacturers in fresh financial troubles and make them losing competitiveness over rival counterparts in export markets.
“Historically, Bangladeshi manufacturers enjoy better competitiveness due to lower electricity prices. It will be a great pressure on the business people as their production cost will go up ,” Policy Research Institute (PRI) Executive Director Ahsan H Mansur told Dhaka Tribune.
It would be difficult to absorb the additional costs at a time when profit and business both were in declining trend, he added.
Apparel sector people also fear that the electricity price hike will cause sharp rise in their production cost.
“With the existing electricity rates, the sector is already struggling to survive and hold the competitiveness in the global markets” Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) first vice president Mohammad Hatem said.
According to Hatem, if the 8.4% rate is implemented; it will increase the cost of a single industrial unit by Tk37,800, in addition to current electricity cost of nearly Tk4.5 lakh per month.
The new rate would put salt on the wounds of manufacturers, who were going through a tough time , said Hatem, also the managing director of MB Knit Limited.
Slamming the price hike decision, BGMEA president said the sector could not bear the load to be caused by further rise in electricity prices.
“Since our costs have gone up by almost 29.40% in the last 4 years and products’ prices have steadily gone down, there’s no way we can afford any increase of any sort of price hike of electricity,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq said.
This would not be beneficial for the industry, she said, urging the government to revisit the decision.
How to keep prices reasonable for biz people
Experts as well as the business people called for increasing efficiency of power generation companies and eliminating corruption in the sector.
It was true that the gas stock was depleting but still 50% power was generated from gas, said Ahsan H Mansur, who questioned the very logic of hiking the electricity tariff when the country was importing power from India at lower rates.
“Our efficiency level is poor and there are irregularities and corruption in the power sector. So, the government should focus on these issues to keep the prices of electricity lower by reducing waste of money,” suggested the economist.
Meanwhile, the business people called for chalking out a plan for long time so that the business people could devise business plans.
When the country’s primary textile sector was going through a tough time due to the outbreak of Coronavirus in China, increasing electricity prices was unjustified, said Bangladesh Textile Mills Association (BTMA) in a statement.
In the given situation, the government should improve the quality of electricity supply and ensure uninterrupted supply, it said further.
BTMA urged the government to reconsider the price hike decision for the sake of industrialization.
