Soaring energy bills blindside millions in Bangladesh

Bangladeshi citizens, still coming to terms with the consequences of frequent energy price hikes from last year, have been slapped with yet another round of gas and electricity price hikes in the gap of five days in the first month of the new year. The inevitable consequences of the new prices over the next few months are beyond the grasp of most ordinary people.

Emran Hossain

Food and non-food inflations rose dramatically after gas and fuel oil prices were hiked last year, respectively, prompting millions of poor and low-income people to throw protein out of their diet, think tanks and consumer rights protection agencies said.

Inflation growth had far outstripped income growth last year, noted independent reports, advising the government not to increase energy prices and extend a helping hand to people with energy subsidies, social security expansion, and new jobs.

The gas price hike last year eventually led to a five per cent rise in electricity price this January, days before the gas price was once again increased by up to 172 per cent on January 18, making inevitable another hefty increase in the electricity price.

‘You must be kidding,’ Swapan Miah, a roadside tea shop owner, told New Age, expressing disbelief over the impending electricity price hike.

‘Who knows our condition better than the government? We can’t afford to pay anymore,’ he said.

Almost every item Swapan sells from his shop in Central Road in Dhaka is costlier than six months ago. Even the price of a cup of tea, with milk or without milk, increased by Tk 3 and Tk 2, respectively.

Ashik E Elahi, one of the owners of Dawat-e-Dhaka, a roadside eatery in Hatirpool, recalled a twofold increase in the oil price since his restaurant began operating two years ago.

The last six months, however, were unbearable as Ashik’s business shrank after Ruti became twice as costlier. In an attempt to not lose customers and keep food prices affordable, Ashik chose to serve less on his customer’s plates than he used to. Still, vegetable curry and lentil soup became 33 per cent more costly at Ashik’s shop.

Consumers responded in varying ways to price shocks last year – some shed protein from their diet while others discontinued treatment or worked overtime.

Restaurants reportedly served stale foods with excessive spices used to conceal its test, further endangering consumers’ health. Reports came from public universities about students skipping a meal – breakfast – to cope with last year’s increased living cost.

Some regularly people traveled long distances, spending hours in jam-packed Dhaka streets to come to wholesale kitchen markets to save whatever they could.

The Centre for Policy Dialogue, a think tank, revealed in October 2022 that millions of workers in garments, hotels and restaurants, bakeries, automobile workshops, rawhide, and shoes could not afford protein in their diet with their meager monthly income.

The CPD estimated that a four-member family in Dhaka needs Tk 9,059 for food, excluding protein, a month – more than an entry-level readymade garment worker’s monthly salary of Tk 8,000.

Adding protein to the diet would take the monthly food cost of a four-member family to Tk 22,421, the CPD said.

In conservative estimates, at least a fifth of 170 million people in the country still lives below the poverty line with less than $1.9 income per person per day.

On January 22, the Consumers Association of Bangladesh, after monitoring prices of 141 food and 74 non-food items, said that last year saw the worst inflation since 2011 because of the energy price hikes in June and August – 23 per cent in gas and up to 50 per cent in fuel oils.

Inflation jumped in two months of the price hikes and in October 2022 the food inflation in cities across Bangladesh, which was negative in May, exceeded the mark of 10 per cent in October. Last year ended with a sustained non-food inflation of over 8 per cent, according to CAB.

In Dhaka city, the CAB report revealed, non-food inflation peaked at 18.6 pc in July while food inflation peaked at 17.25 per cent in September. The CAB report represented prices of foods such as rice, lentil, flour, egg, oil, fruits, milk, transport, and hygiene materials.

‘It might take a month or so before people start filling the impacts of this year’s gas price hike,’ said energy expert Mohammad Tamim.

On January 18, the gas price was increased by up to 179 per cent in power, captive power, industry, and commercial sectors.

The latest gas price hike took the average per unit of gas price to Tk 21.27, far above the actual cost of a maximum of Tk 15, said Tamim.

‘The government is making money. Making a profit in this difficult time is a crime,’ said Tamim, drawing instances of countries providing massive subsidies to give as much relief as possible to their citizens.

But Bangladesh, under the condition to withdraw subsidy for accessing $4.5 billion from the International Monetary Fund amidst the worsening dollar crisis, has been rather brutal in announcing new prices.

The power and energy state minister Nasrul Hamid already announced that electricity prices would be adjusted every month through executive order.

Prime Minister Sheikh Hasina said that subsidies would be withdrawn from the power and energy sector generating $2bn in debt yearly in loans and interests and paying nearly $1 billion in capacity charges a year.

Capacity payment – which crossed the mark of Tk 72,000 crore in the decade ending in 2020-2021 – is the amount legally payable to power plant owners ensuring them a profit on investments irrespective of power produced.

Bangladesh can now use less than 40 per cent of its installed capacity of 26,700MW. About 80 per cent of power plants remain partially and fully closed nowadays with power cuts in mid summer.

The power sector’s financial burden would continue to grow rapidly this year with many new massive base-load power plants coming into operation – including 3500 MW based in liquefied natural gas by December 2023.

But Bangladesh is unlikely to get the gas, roughly meeting 60 per cent of the energy need, it needs through 2026, international energy intelligence services said, priced out of the spot market by competitors like European countries and Japan.

The incumbent government in fact never imported the required gas despite people and industries suffering from acute energy crises after paying for far more energy than what they consumed.

The Technical Evaluation Committee of the Bangladesh Energy Regulatory Commission revealed in a March 2022 public hearing that the state-owned Petrobangla, the lone buyer and importer of natural gas, pocketed Tk 2,538 crore by importing 553mmcfd less LNG than promised in the financial years of 2019–20 and 2020–21.

The gas price last year was fixed considering 100 mmcfd of LNG import from the spot market, which meet less than 20 per cent of gas demand, but the government did not import any LNG since July.

People and industries paying for an amount of LNG that they would never get would give rise to further inflation and increase production costs, experts said. ‘In the coming days, factories will close down and many people will lose jobs,’ said Tamim.

The production cost would be particularly high in some industries, such as steel, ceramics, glass, and textiles, whose production is directly reliant on gas, experts noted.

The risk of pricing out many electricity consumers is it would encourage energy stealing, experts said.

Suruj Miah, a waiter working in Bangla Motor, doubled his working shift to 18 hours and made his home visit more infrequent to make up for the soaring living cost. ‘The price hike impacted me in a strange way as customers now tip less,’ said Suruj, whose house rent went up in January.

Night guard Mofazzal Hossain, a comorbid patient, with a monthly salary of Tk 11,500 might stop taking medicines soon following a 20 per cent increase in his drug price. Mofazzal’s only son’s madrassa fee also increased. While discussing his predicaments, Mofazzal suddenly got lost in thought before he talked again about one of his colleagues, Habibur Rahman. The day Habib committed suicide three years ago he was supposed to go home on a visit, Mofazzal recalled, admiring Habib as a gentleman, who loved to wear clean clothes.

‘My friend was squeezed in financial burden. And he took his own life one day as the burden mounted and he could never match it with his income,’ said Mofazzal, a man in his 60s.

Continue Reading