The Consumers Association of Bangladesh terms the price hike as irrational
The country's manufacturing sector, which is already reeling under the impact of the coronavirus outbreak, is going to plunge into a deeper crisis with the electricity price hike.
Export earnings have been witnessing a negative growth for the last seven months. The import of almost all products including capital machineries has decreased.
Businesspeople fear that the increased power price will add to their sufferings caused by the coronavirus.
The Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) thinks this will put country's trade and business in tatters.
Bangladesh might lose the competitive edge in the export market, said Siddiqur Rahman, vice-president of the FBCCI.
Terming this hike illogical, the Consumers Association of Bangladesh said prices of daily essentials will go up, causing sufferings for common people.
On Thursday, the Bangladesh Energy Regulatory Commission (BERC) announced the increased price of electricity which will take effect from March 1. The wholesale price of electricity rose by 8.4 percent while both transmission price and retail price saw a 5.3 percent increase.
The industrial sector will suffer the most for the power price hike. Once the new price comes into effect, the electricity bills will go up to Tk8,70,000 on an average per month for heavy industries and Tk17,340 for medium industries.
Terming the hike as deadly for the manufacturing sector, FBCCI Vice-president told The Business Standard, "The cost of doing business in our country costs is usually higher than that in competitor countries. In 2017, the power price was hiked and last year, the gas price was increased."
"Our businesses have been going through a tough time for long. We [businessmen] are already in uncertainty over the coronavirus outbreak. Every person now is in uncertainty. Under this situation, increasing the price of any utility service is totally unacceptable."
Mentioning that many industries will face closure, Siddiqur said the readymade garment industry has been facing a negative export growth continuously. Factories are shutting down. No businessman can think of new investment through savings.
"Under the circumstances, we are worried about the country's future" he added.
He suggested setting a fixed rate of any utility service for at least five years.
Volatility in prices of consumer products
The CAB thinks the electricity price hike both at the consumer level and in the production sector will impact prices of daily essentials.
"The production cost goes up after a few days because of the hike in power price. As a result, common people have to buy products at higher prices," said Golam Rahman, president of the organisation.
"The procedure of increasing power prices is illogical. The electricity facility in villages is not the same as in towns. But the price is similar. We are also against this discriminatory policy," he added.
The expense of Tk10,549 crore in production, supply and distribution of electricity is irrational. The power price has been hiked to adjust with the cost.
Ahsan H Mansur, executive director of the Policy Research Institute, said it is necessary to stop system loss and theft in the electricity sector rather than increasing power prices every two years.
Because of unplanned expenses for the import of fuel, the cost of electricity production is increasing. Despite that fact Bangladesh is one of the poorest countries in the world, Dhaka is one of most expensive cities. The cost of living in the Bangladesh capital is the highest among the South Asian countries, he said.
The overall negative growth in export earnings of Bangladesh in the last seven months stood at 5.21 percent.
From July 2019 to January 2020, the country earned $22.91 billion from export although the earnings were $24.17 billion during the same period last year.
The apparel sector, which contributes the lion's share to the overall export earnings, saw a 5.71 percent fall in this time.
Impact of coronavirus
According to the Customs Intelligence and Investigation Directorate, the export-import activities with China have fallen significantly.
The import from China fell by 22 percent to 6.73 lakh tonnes in January this year from 8.52 lakh tonnes over the same period last year.
In the first eight days of February, it dropped by 38 percent to 1.37 lakh tonnes from 2.73 lakh tonnes in the corresponding period a year before.
China alone provides 26 percent of the country's total imports.