Bangladesh's proposed hike in gas prices sparks protests

DHAKA: Bangladesh has announced plans to raise natural gas prices for the second time in under two years, meeting with immediate protests from political parties and industry groups, including the $28 billion garments industry, the country's economic mainstay.

Gas prices will rise by an average 22.7 percent in two phases starting next month, the Bangladesh Energy Regulatory Commission (BERC) announced late on Thursday.

Five political parties including the Communist Party of Bangladesh (CPB) called for a half-day general strike in Dhaka on Tuesday to protest against the increases, following demonstrations and protest rallies on Friday.

“We will continue our protest until the government changes its decision," said Mujahidul Islam Selim, president of the CPB.

The Bangladesh Nationalist Party, the largest opposition party also demanded the decision be revoked, with BNP Senior Joint Secretary General Rizvi Ahmed threatening to call for mass protests across the country if the government went ahead with the price increases.

Rahman Murshed, a senior official with the BERC told Reuters on Friday that the increase was necessary to reduce subsidies on gas prices. Gas is currently sold on at nearly half the purchased price.

Murshed said the "rationalised prices" will be effective in two phases in March and June.

Mohammad Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association, said the price hike was a blow to the industry as higher gas prices will raise the cost of electricity at a time when it is struggling to compete.

"The price of readymade garments is decreasing by the day," Rahman said. "Now our cost of production will increase, lowering our competitiveness further."

Power plants consume 40 percent of all the gas bought by Bangladesh and the price for the power generators is set to rise by 34 percent, Murshed said.

Households use 13 percent of the gas consumed, the transport sector about 6 percent, fertilisers 6.5 percent and the industrial sector about 17 percent, he added.