Steel makers urge govt to reconsider power tariff hike

Steel manufacturers today urged the government to reconsider a proposed electricity tariff increase, saying higher energy costs could weaken an industry already hit by rising input costs, slowing demand, and a difficult business environment.

At a press briefing at the Economic Reporters' Forum in Dhaka, leaders of the Bangladesh Steel Manufacturers Association (BSMA) said the sector was under strain from global economic uncertainty, high borrowing costs, gas shortages, and sluggish investment.

"If electricity prices are increased again, production costs will rise sharply and many factories may be forced to reduce output. Some could even face partial or complete shutdown," said BSMA President Mohammad Jahangir Alam.

BSMA said industrial electricity tariffs have risen around 30 percent in recent years, while gas prices in some cases climbed nearly 300 percent.

It said the industry was also dealing with the lingering effects of the Covid-19 pandemic, global supply chain disruptions, the Russia-Ukraine war, exchange rate volatility, and uncertainty in the Middle East.

BSMA also criticised charges imposed on industrial consumers, including demand charges, additional VAT, and power factor penalties, describing them as indirect tariff hikes.

It said most large steel factories receive electricity through high-voltage connections of 33kV, 132kV, and 230kV, where system and distribution losses are minimal, yet they still bear these charges.

The association also called for a review of capacity payments in the power sector, saying more than Tk 50,000 crore is paid annually as capacity charges.

BSMA urged the government and the Bangladesh Energy Regulatory Commission to keep electricity prices unchanged for the steel sector, reduce demand charges and VAT, review power factor surcharges, and introduce special tariffs for high-voltage industrial consumers.