Bangladesh exporters fear power price hike will cause further dip

The hike in power prices may hit the already dipping exports of Bangladesh, entrepreneurs fear.

Faysal Atikbdnews24.com
Published : 28 Feb 2020, 10:54 PM
Updated : 28 Feb 2020, 10:54 PM

The risk of escalation of a conflict in the Middle East following the recent US killing of a top Iranian military commander in Iraq had snuffed out Bangladesh’s chances for a turnaround in export earnings after a slight growth in December following a four-month decline.

The coronavirus outbreak in China might force the US, European countries and others to divert readymade garment orders to Bangladesh, the second largest apparel exporter after China, but the disruption in raw material supply due to travel restrictions has stoked fears of a further slide in Bangladesh’s exports.

The latest blow to exports, a 5.3 percent hike in power prices announced on Thursday, will be “the straw that broke the camel’s back”, believes Rubana Huq, the chief of the apparel exporters’ association BGMEA.

Production costs increased by 29.4 percent over past four years while prices of readymade products dropped in the international market, she told bdnews24.com on Friday.

BGMEA President Rubana Huq speaks at a pre-budget discussion at Amari Dhaka Hotel on Monday. Photo: Mahmud Zaman Ovi

“The garment industry doesn’t have the ability to take the hit from power price hike or rise in production cost for any other reason in this situation,” she said.

A large industrial unit that has been paying Tk 16.2 million things n electricity bills a month will have to pay Tk 17.1 million once the new rates take effect from Mar 1, the Bangladesh Energy Regulatory Commission said.

Mizanur Rahman, executive director of Samata Leather Complex, a company in one of the key export sectors of the country, said production costs will rise abruptly due to the power price hike as the industry is largely dependent on electricity.

“We are calculating the effects of the power price hike,” he said.

Obaidul Quader, the general secretary of the ruling Awami League and the road transport and bridges minister, urged the people to accept the new power tariff promising uninterrupted supply.

The hike is for a “longterm solution to electricity problems”, he told an event in Dhaka on Friday.

But Jashim Uddin, managing director of Bengal Plastics, questioned the hike even after a rise in electricity generation. “Why have the prices been increased when our electricity generation surpasses consumption?” he asked.

“We don’t have quality power. The transmission lines are not capable though electricity generation has increased. So, the large factories need to generate their own power to cope with the power cuts,” he said. 

Bangladesh’s products will eventually be out of the “volatile” international market following the power price hike, Jashim, a former vice-president of the apex traders’ body FBCCI, fears.