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Electricity tariff hike likely soon

Published : 26 Sep 2022 10:09 PM

People should brace for yet higher electric bills as the Bangladesh Energy Regulatory Commission (BERC) is set to raise bulk power tariffs again by early October.

Earlier in June, BERC raised the gas prices by 22.78 percent for all users, on an average despite repeated opposition voiced by the consumer rights groups. After the increase of gas prices, cost of living has also increased. 

Sources said the bulk price of electricity may increase by 20-25 percent. BERC has already completed all preparations for price adjustment. The announcement can come anytime after a green signal from the government.

According to the sources, some policy decisions of the government are subject to price adjustment, especially the issue of subsidies. It is being thought about whether there is a way to do it without increasing the price. If the government agrees to increase the subsidy in the power sector, the price may not increase, otherwise it will. The price of retail tariff for consumers would also go up if the bulk price of electricity increases. 

In the last 12 years, electricity prices have increased by 118% at bulk level and 90% at the consumer level. Energy experts termed the proposal to hike power prices “illogical and unjustified”.

Cutting waste of power, systems losses, taxes on fuel and corruption will bring power prices to a tolerable level, they said.

The BERC Act has a legal obligation to issue an order within 90 working days after the public hearing. The public hearing for adjustment of bulk tariff was held on May 18, so there is time till October 14.

A technical committee of BERC had recommended increasing the bulk power tariff by 57.83 percent at the public hearing. 

The committee recommended increasing the bulk power price by Tk 2.99 per unit against BPDB's proposal of raising it by Tk 3.39 per unit. 

Currently, BPDB is selling wholesale power at Tk 5.15 per unit, and the government is also giving subsidy of Tk 3.39 per unit. The agency proposed to increase the price to Tk 8.56 per unit without a subsidy but BERC recommended the tariff hike by Tk 8.16.

Earlier, BPDB had proposed around a 65.57-percent hike in bulk electricity tariffs on the pretext of BERC's raising of natural gas tariffs and hike in oil prices on the international market. However, in the public hearing, the proposal and recommendation to increase the price was strongly opposed.

The bulk price of electricity is increased for the Power Development Board (PDB). PDB provides electricity at this price to the distribution companies at the consumer level. The technical committee, in its recommendation, said it would not be possible to implement bulk prices unless prices were raised at the consumer level.

Consumers, different rights bodies, top organizations of traders and their representatives had strongly opposed the proposal and recommendation to hike electricity prices. They raised their voices during public hearings organized by BERC. 

The top organization of traders in Bangladesh said in the public hearing that despite the increase in production capacity, there was no planned development in the power sector. 

As a result, electricity generation costs have increased. The term of high cost of rental power plants (Quick Rental) has been repeatedly extended without shutting down. The generation cost also increases due to running low-efficiency power plants instead of high-efficiency plants.

Mostofa Azad Chowdhury Babu, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industries, said that BPDB had failed to adhere to international standards and strategies for efficient use of electricity, quality of service, and energy management. The tax on fuel has been imposed on the productive work of the country, including the consumer, which is destructive and suicidal. If the price of electricity goes up, the industries will be forced to increase the price of their products, which will further increase inflation. 

Energy experts said high-priced liquefied natural gas (LNG) is being imported without emphasizing exploration and production. This burden of extra cost is putting pressure on the consumers.

Consumer Association of Bangladesh said that electricity generated from coal is being imported from abroad at Tk 6.60 per unit. And the cost of electricity generated from coal in the country is taka 8.71. PDB's power plant in Bhola is being run at only 38 percent 'plant factor'. This is doubling the production cost.

The National Load Dispatch Center (NLDC), a PGCB agency, controls the power plants. CAB's allegation against them is that they are increasing production costs by running low-efficiency power plants.

CAB has suggested some ways to address the PDB deficit without raising prices. They have calculated that it is possible to keep a surplus of Tk 3,372 crore by adjusting the deficit of Tk 40,000 crore at the wholesale level.

Energy expert Professor M Shamsul Alam said that diesel based power plants are closed due to being expensive, and for the same reason LNG import from the spot market is stopped. So electricity prices should be reduced now.