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Public hearing on bulk power price hike today

Published : 17 May 2022 09:57 PM

After the public hearing on gas price hike, another hearing on a proposal for raising electricity tariff at the bulk level will be held today (Wednesday).

Bangladesh Energy Regulatory Commission (BERC) will hold the hearing at BIAM Auditorium in the capital to scrutinise a price adjustment proposal submitted by the state-run Bangladesh Power Development Board (BPDB). 

Earlier, the BERC held a public hearing on gas distribution companies' 117% price hike proposals from 21-24 March, which received stark criticism from the consumers and other stakeholders. The BERC's technical evaluation committee analyzed the proposal and proposed to increase the price of gas by 33 percent.  Power industry insiders said that it is obvious that if the bulk electricity tariff is raised, it will ultimately push up the tariff at retail 

level. So, the public hearing on retail tariff will come consequently.

All the state-owned power distribution companies have already submitted their respective proposals to the BERC to raise the power rates at retail level.

But this time, the BERC is going to hold a public hearing on the bulk tariff proposal, keeping pending the request for raising retail price.

The BPDB moved the proposal urging the energy regulator to set the bulk power tariff at Tk 8.58 instead of existing Tk 5.17 per kilowatt hour (each unit). BPDB sells per unit of electricity at the price to the electricity distribution companies which was increased in the last tariff order in February 2020.

On the other hand, BPDB's purchase cost of electricity from the oil-based rental and quick rental power plants varies from Tk3 per unit to Tk16 per unit and even more.

It attributed the increasing fuel cost and other soaring expenses for financial losses saying that the production cost of electricity has gone up to Tk 4.24 per unit in 2022 from Tk 2.13 in the fiscal year 2019-20.

In the proposal, BPDB said if the bulk electricity price is not raised, it will face a shortfall of Tk30,251 crore in the current fiscal year due to electricity purchase from expensive liquid oil-based plants and also gas price hike (which is now under process).

Therefore, it asked the regulator to increase the bulk electricity price to offset its expected deficit, said a source at BERC.

Due to the high-cost purchase and sales at a lower rate, BPDB has been incurring losses gradually which was being tackled by the government subsidy.

In 2010-11, the government provided a Tk4,511.90 crore subsidy to BPDB which was increased to Tk11,777.91 crore in the 2020-2021 fiscal year. 

Currently, 51.23 percent of the total electricity in the country comes from gas-fired power plants. In this situation, energy experts think that this public hearing will not be fruitful without fixing the price of gas.

According to the law of the commission, there is an obligation to announce the price increase proposal within 90 days of the hearing. As such, this timeline is coming to an end in late June. However, the law mentions 90 days for hearing, but it is not clear whether it is 90 working days. Although there has been controversy in the past, it has not been resolved.

The BPDB proposed to increase the price of electricity in mid-January, citing the rise in fuel prices. At the bulk level, it is said to increase the price of electricity by an average of 66 to 69 percent.

Earlier in January, six gas distribution companies had proposed to increase the monthly gas bill for two burners from Tk 975 to Tk 2,100 and for one burner from Tk 925 to Tk 2,000 for household users. However, BERC's technical committee recommended increasing the price of gas for two burners from Tk 975 to Tk 1,080 and the price of gas from one burner from Tk 925 to Tk 990.

Officials said that if the price of gas goes up, the electricity price will also go up. In addition, commercial and transportation costs will also increase. Again, if the price increases in the industry, it will have an effect on the price of the product. Considering the overall aspect, inflation will increase. As a result, issues are being considered before the increase in gas prices. The unrestrained rise in commodity prices in recent times is having an adverse effect on the public mind.