Bangladesh recently hosted an investment summit, inviting both domestic and foreign entrepreneurs to invest in the country. But even before the buzz of the summit faded, the government announced a 33% increase in gas prices for new industries. As a result, each unit of gas will now cost industries an additional Tk 10. Entrepreneurs are calling this move contradictory to the government’s investment-friendly rhetoric. They fear this decision will disappoint new investors and jeopardize potential industrial growth.
Former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), A K Azad, told Deutsche Welle, “This sudden price hike sends a negative message both domestically and internationally. New investors will lose interest. It will bring stagnation in establishing new factories in the country. We already face a 15.5% tariff in the U.S. market, and an additional 10% has been added recently. This alone has put us under tremendous pressure. Now the gas price hike has deeply frustrated us. We are already falling behind in competition, and this will only make it worse. Right now, the government can’t even provide uninterrupted gas. Often, the meters run dry. To maintain production, we’re being forced to rely on diesel. How much additional cost will this impose? Do we even have the capacity to afford it?”
On the other hand, energy advisor to the Power, Energy and Mineral Resources Ministry, Muhammad Fouzul Kabir Khan, told Deutsche Welle, “This will not hinder investment—rather, it will strengthen it. We must remember that gas reserves are depleting. To meet the shortfall, we are importing LNG. The import price is about Tk 70. Currently, industrial gas is priced at about Tk 30 per unit. How long can you continue with Tk 40 in subsidies? The current subsidy in the energy sector is already Tk 20,000 crore and rising. After this adjustment, the gas price has stood at around Tk 40, still requiring a Tk 30 subsidy. This hike sends a signal: gas is decreasing. Businesses will now plan accordingly, bring in gas-efficient machines, or use alternatives like LPG. If we don’t send this signal now, and more factories are established, we won’t be able to supply them gas at Tk 30 while importing at Tk 70.”
When asked how the hike will affect productive sectors, ABM Shamsuddin, managing director of Hannan Group and former vice-president of BGMEA, said, “Due to multiple challenges, it has become difficult to sustain businesses. The extra U.S. tariffs and the domestic gas price hike are pushing us further behind in global competition. Why was this price hike done? No clear justification has been given. The previous government promised uninterrupted gas two years ago and raised the price from Tk 11 to Tk 30. That promise was not fulfilled. And now prices have been increased again. If this continues, industries won’t survive.”
When questioned about whether the government has taken any steps to increase gas supply—especially since many factories are already running on alternative sources—Fouzul Kabir Khan said, “That’s exactly why we raised prices. We are trying to increase pipeline gas supply. Our daily demand is 4,000 MMCFD (million standard cubic feet per day), but we can only supply 2,800 to 2,900 MMCFD. That leaves a deficit of over 1,000 MMCFD. We must fill that gap. People need to understand that the farther the gas travels in a pipeline, the lower the pressure becomes. But if we can increase supply, we can stabilize it. That’s what we’re trying to do.”
Despite widespread opposition from consumers and business representatives, the gas price hike was implemented. For new industries, the price was increased by 33%, meaning an additional Tk 10 per unit. For older industries, any usage beyond their approved load will be charged at the new rate. For “promised” industrial connections—those with demand notes already issued—any usage over 50% of approved load will also be billed at the higher rate.
BERC (Bangladesh Energy Regulatory Commission) Chairman Jalal Ahmed explained, “As domestic gas supply declined, LNG imports rose. To cover the extra costs of LNG, Petrobangla came under pressure. They proposed a 150% increase.” However, most participants in public hearings opposed the hike. When asked on what basis the price was increased, Jalal Ahmed told Deutsche Welle, “If we went by the revenue requirement, the hike would have been much higher. So we kept it at 33% to keep it bearable for consumers.” Notably, the subsidy impact wasn’t factored in. Asked whether the increase followed directives from the Ministry of Power, Energy and Mineral Resources, he said, “It wasn’t done on the ministry’s prescription.”
Asked whether this new pricing structure—differentiating between new and old industries—might face legal challenges, the chairman responded, “The pricing was done within BERC’s legal jurisdiction.” On the question of whether this could deter new investment, he said, “It’s too early to say whether investment will decline. If new investors find it feasible, they will still come. They might even use alternative fuels.”
Dr. Shamsul Alam, energy advisor to the Consumers Association of Bangladesh (CAB), believes policymakers are deliberately pushing for factory closures to make the country import-dependent. He told Deutsche Welle, “Whose advice is this being done under? Even those giving the advice know this will shut down factories. They want to make the country reliant on imports. The gas price hike will not only block new factories but also shut down existing ones. The government wants to align prices with LNG imports. There is no interest in domestic gas production. They are trying to make the country entirely dependent on LNG. During the public hearing, we strongly opposed the government’s decision and presented logical arguments—but they ignored everything.”
According to BERC’s order, the gas price for captive power plants (used for self-generated electricity) has risen from Tk 31.50 to Tk 42. For industrial connections, the price has increased from Tk 30 to Tk 40. The new rates took effect from April 13. Any connections approved after this date will have to pay the higher price. For demand notes issued before that date, users will pay the higher price if their usage exceeds 50% of the approved load. Similarly, older industrial users will be billed at the new rate for any usage beyond their approved load.
Previously, in January 2023, citing uninterrupted supply, the government raised gas prices by 150–178% for industries. The unit price for industrial and captive gas was raised from Tk 11 to Tk 30, and later to Tk 31.50 for captive. Business leaders argue that while the new government is trying to attract investment, this decision to increase gas prices goes against that objective. They believe the hike poses a serious risk to new investments and may also affect foreign direct investment (FDI).
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Deutsche Welle, “Even when gas was Tk 30, it was a challenge to establish new industries. Now, with further increases, investors will lose all interest. The government says it wants to boost investment, but this kind of decision puts that investment at risk.”
Former BGMEA director Mohiuddin Rubel echoed these concerns: “Any cost increase reduces competitiveness. In the garment sector, we’re already falling behind compared to our competitors. Even with this price hike, there’s no guarantee of improved supply. Industries have been suffering from this problem for a long time. At the same time, the global economy is in crisis. We are also dealing with U.S. tariffs and India’s transshipment issues. Under these circumstances, this gas price hike will be hard for businesses to absorb—especially for small and medium factories, whose owners will face serious difficulties.”
