Steel makers urge not to raise electricity prices

Steel manufacturers yesterday urged the government to reconsider a proposed electricity tariff increase, after claiming that the Bangladesh’s steel sector is now in the intensive care unit (ICU)).

They warned that if power prices are raised under the current circumstances, factories will have no choice but to slash production, with several facing imminent partial or complete closures.

The demand was raised at a press conference organised by the Bangladesh Steel Manufacturers Association (BSMA) at the Economic Reporters’ Forum (ERF) auditorium in the capital. on Tuesday
Reading out a written statement, BSMA President Mohammad Jahangir Alam asserted that there will be no need to hike electricity prices if the government effectively curbs massive capacity charges paid to idle power plants and checks rampant system losses.

“The domestic industry and investment landscape are passing through an exceptionally challenging phase due to the lingering economic shocks of the COVID-19 pandemic, abnormal price hikes of fuel and raw materials caused by the Russia-Ukraine war, a persistent dollar crunch, severe exchange rate volatility, and ongoing geopolitical tensions in the Middle East,” he said.

Compounding these woes, Jahangir said, the pace of construction work in both public and private sectors has slowed down significantly, causing a sharp decline in domestic steel demand.

Furthermore, high bank interest rates, credit limitations, gas shortages, soaring import costs, and a severe crunch in working capital have created an unsustainable environment for manufacturers, he said.

The association pointed out that over the last few years, electricity tariffs for the industrial sector have escalated by nearly 30 percent, while gas prices have skyrocketed by up to 300 percent in certain categories. Any further hike in power tariffs will multiply production costs exponentially, stripping Bangladeshi industries of their global competitiveness.

The BSMA leaders highlighted that most large-scale steel mills procure electricity directly from the national high-voltage grid, which eliminates any transmission, distribution, or system losses on their end.