Higher tariff without necessary gas supply will cause disaster for industries

The latest hike in gas tariff has led to a 150% increase in gas bills for industries. 

Till June last year, gas bills constituted 7% of total the cost of production in our industry. But it increased to 8% since June. And as a result of the latest price hike, the share of gas bills in the overall production cost will increase by another 12 percentage points. 

But, are consumers ready to spend this extra sum? And if an industry falls below the break-even point for this reason, it will never be sustainable.

On the other hand, if the prices of export goods increase, our competitiveness (in the international market) will be affected. It is not possible to ask for a price increase in the current global economic situation. This will lead to an unsustainable, and serious situation.

There is a framework on how to set (gas) prices. But, the state has done this all of a sudden bypassing that system. The new tariff has been made effective from 1 February. 

Literally, we have been paying for the air along with gas for the last eight months. The distribution companies will also have this information. They have collected more from the private sector compared to what they have supplied.

Are those involved on the supply side (of gas) ready to meet the industry's demand from February one? The increased prices should be made effective if they can supply gas as per the demand of the industrial sector. If higher prices are charged without ensuring this (sufficient gas supply), it will cause a disaster for industries.

The industrial sector is linked to the government's revenue income. Therefore, if an industry collapses, the government's revenue will decline. And if there is less revenue collection, the government will have to borrow money or print money to meet the deficit. 

There is no policy consistency here (in the country), and abnormalities are there. If we do not make long-term visionary policies, if we do not make informed decisions, and if we do not make decisions after discussing with related parties, then it will not sustainable for the economy in the long term.

Mohammed Humayun Kabir FCA, CEO, Shinepukur Ceramics Ltd