The basis proposed for setting gas tariffs is unconstitutional, against the laws and against the principles of fairness, according to the Bangladesh Chamber of Industries (BCI) recently.

The proposals were to set gas tariffs solely based on the liquefied natural gas (LNG) import price for new connections and excess gas usage than the sanctioned load for existing connections, it said.

The "unrealistic" and "one-sided" gas price hike during the previous government was the main reason behind the troubles being faced by industries, it added.

In a letter to Bangladesh Energy Regulatory Commission (BERC) on March 9 following a public hearing on price hike proposals, the BCI demanded to reduce gas prices through the curbing of system losses.

"Before the price hike, energy cost used to be 5 to 6 percent among the overall production cost, which now stands at 10-15 percent," wrote the chamber of the industrial community.

For example, the energy cost for producing one yard of fabric was Tk 18 in 2022, and it increased to Tk 26 in 2023, said the letter.

Besides, the cost per kilogramme (kg) for yarn production reached $2.45, whereas it is possible to import each kg of knit fabric from neighbouring countries at $2.18, it said.

As a result, in 2024, knitwear imports increased by 39 percent. "How will industries survive under these conditions?" asked the BCI.

"During the gas price hike in 2023, a promise was made to entrepreneurs for uninterrupted gas supply, but entrepreneurs are receiving only 30-40 percent of the required gas, and production is being hampered due to low pressure," it said.

The BCI said production of every industrial establishment has decreased by 30 percent to 40 percent.

This is due to the "one-sided" decision and the failure to provide uninterrupted gas supply, particularly in areas like Gazipur, Ashulia, Savar, Narayanganj, Munshiganj, Bhaluka, and Narsingdi, it said.

For some industries, such as ceramics and steel, production has decreased by 50 percent, it said.

Consequently, the contribution of industries to the GDP dropped from 8.37 percent in fiscal year 2022-2023 to 3.57 percent in the fiscal year 2023-24, the letter said.

The private sector loan growth increased, foreign direct investment decreased and other indicators also reflect the troubles faced by industries, it said.

The BCI argued that the articles 27 and 31 of the constitution guarantee equality for all and if the proposals were implemented, the same customers would be treated unequally.

Besides, the Gas Act 2010 and BERC Act 2003 clearly state that its goals were to create a competitive market through the participation of the private sector and individuals whereas the proposals were noncompetitive, it said.

"Regardless of the time of connection, all gas customers use a mix of gas supplied from the national grid and imported LNG," it said.

"Therefore, imposing a price nearly two and a half times higher for new customers than for those who were previously connected is contrary to the constitution, the law, and the principles of fairness," the letter concluded.

The consideration of such proposals from the regulatory body caused panic among business owners and entrepreneurs across the country, the letter said.

The BCI suggested to reduce the price from Tk 30 per unit to Tk 24.39 for industrial and business sectors.

It urged to improve the efficiency of the gas distribution companies and cited that reducing waste, particularly reducing the huge system loss of the Titas Gas Transmission and Distribution PLC (13.53 percent) to a minimum level, is necessary to increase gas supply.

Furthermore, it suggested that operating coal-fired power plants at full capacity, removing double VAT and source taxes on LNG imports, and reducing other charges imposed by Petrobangla and BERC, which could lower gas prices as well.

"Business leaders believe that this proposal to increase gas tariffs has thrown everyone concerned in the industrial and business sectors into a state of uncertainty," the letter added.