The Bangladesh Energy Regulatory Commission (BERC) has indicated at raising unit price of electricity
BERC has justified the issue of increasing electricity price by announcing increase in gas price.
Energy sector experts believe that the increase in gas price for power plants means it will have a spillover effect and the electricity prices will hike soon.
Bangladesh Energy Regulatory Commission (BERC) on Sunday raised the prices of gas by 22.78 percent for all users, on average despite repeated opposition voiced by the consumer rights groups.
Mohammad Abu Faruqe, acting chairman of the commission, said that the price of gas would also go up as the price of gas for power generation increased. However, it is not yet clear how much it will increase.
A technical committee of BERC had recommended increasing the bulk power tariff by 57.83 percent at a public hearing on May 18.
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, PDB had proposed to BERC to increase the bulk price of electricity by 65.57 percent. 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 organization of traders and their representatives had strongly opposed the proposal and recommendation to hike electricity price. 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.
In the last 12 years, electricity prices have increased by 118% at bulk level and 90% in consumer level.
According to the committee’s estimates, PDB will incur a loss of Tk 400 billion if it sells nearly 82 billion units of power to the distributors at the current rate in 2021-22 fiscal year. It said the new tariff can be readjusted if the government continues to give subsidies.
In the hearing, Professor M Shamsul Alam, senior vice-president at the Consumers Association of Bangladesh, 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, he said.
Mostofa Azad Chowdhury Babu, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industries, said the economic impact of a power price hike was not included in the analysis.
“PDB had failed to adhere to international standards and strategies for efficient use of electricity, quality of service, 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,” he added.
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 plant. CAB's allegation against them is that they are increasing production costs by running low-efficiency power plant.
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.
This has led to cost savings in a number of sectors, including non-imposition of withholding tax, refundING of oil duty exemption, withdrawal of VAT on coal, official import of oil instead of private sector, cancellation of 'illegally' increased fuel prices, run more efficient combined cycle power plants in more plant factor, to standardize the prices of all customers who take power directly from the grid and to rationalize the wholesale prices of REB.
Energy expert M Shamsul Alam said it was proposed to increase unjust, unreasonable and looting expenses without providing subsidies and taking appropriate steps to reduce costs. Considering Cab's offer, there is no need to increase the price.
