It’s clear to see that small restaurants and eateries are having a hard time adjusting to the recently launched commercial gas, which is three times more expensive than the domestic gas.
The huge cost difference is the main complaint. But this cost comparison is slightly misplaced, because it is not just that gas is more expensive, the subsidy component is also being removed, which makes the hike appear all the way more steep.
Commercial gas was introduced, because consumption levels on subsidised gas is almost reaching the ceiling of 700 metric tonnes a month, which Bhutan gets from India as a quota item with a 67 percent subsidy.
It comes as a quota item, because it is meant for household consumption only and, if records are anything to go by, most are in use by commercial units, big and small.
Of course, Bhutan could request good friend India to increase the quota, but its not that simple, when India itself is facing a shortage of subsidised gas. Besides, it could be easily pointed out that commercial establishments are using up most of Bhutan’s quota meant for households.
While the more expensive hotels and restaurants have welcomed the introduction of commercial gas, because for them it means an assured stock for commercial use, a likely possibility is that small operators could move to using electricity for cooking to avoid the high commercial gas prices.
The demand for cooking gas has shot up in the past year or so, with the hotel and restaurant segment itself seeing a 20 percent growth, in response to an expanding tourism sector, and a more mobile domestic population. Increased competition has meant that restaurants cannot just jack up menu prices.
Some observers have pointed out that such a trend has not happened in India, where commercial outlets also have to use commercial gas, so it may not happen in Bhutan. But in India the price of electricity is way higher than it is in Bhutan.
Bhutan continues to have one of the lowest electricity tariffs, not only in the region, but also in the world. So there is every possibility of commercial units making the switch.
This has become a bit of a concern for hydropower officials, who have expressed that higher domestic consumption, with more people using electricity to cook, could mean lower export to India, and therefore lower hydropower revenue.
Once again, it is about finding out which would be the better economic option – importing gas or allowing commercial outlets to use more electricity. In the end the people must benefit.