Special Correspondent :
The government has announced an increase in power tariffs amidst opposition from various sectors, including the business community.
According to the Power, Energy and Mineral Resources Ministry, electricity tariffs will rise starting March 1, with gas prices already increasing this month.
This decision has sparked protests from the Consumers Association of Bangladesh (CAB) and the National Democratic Front (NDF), who argue that amidst high inflation, this hike will further escalate the cost of daily essentials.
Critics claim the government’s decision aligns with recommendations from the International Monetary Fund (IMF) and have appealed for a reconsideration of the tariff hike.
Additionally, gas prices for power generation have seen a 75 paisa per cubic meter increase as per a recent gazette, effective this February.
State Minister for Power, Energy and Mineral Resources, Nasrul Hamid, mentioned that electricity rates could see an increase of Tk 0.34 to Tk 0.70 per unit. This adjustment aims to phase out the current subsidies provided to the power sector. The last hike in electricity tariffs was in March of the previous year.
He said that this step was being taken as part of the government move to come out of the subsidy now being given to the power sector. The government last increased the electricity tariff in March last year.
According to the BPDB’s Annual Report 2022-23, the fiscal year saw the production of 87,024 million kilowatt hours of electricity at a total cost of Tk 98,646 crore.
Its per unit production cost was Tk 11.33, while it was selling electricity at Tk 6.7 per unit – incurring a loss of about Tk 4.63 per unit.
This imbalance has led to a staggering loss of Tk 47,788 crore for the fiscal year, as the government grapples with purchasing power from private and international sources at significantly higher rates.
With this huge loss, the government has been facing great trouble as it has to purchase electricity worth Tk 82,778 crore from private sector power producers, while it generates electricity worth Tk 13,307 crore from its own generation plants.
The annual report also shows that the BPDB’s average per unit production cost from its own plants is Tk 7.63, while it is Tk 14.62 at the independent power producers or IPPs, at rental plants Tk 12.53, at public plants Tk 6.85, and imported power from India at Tk 8.77.
The government purchases electricity from the private sector and India in dollars.
The power generation capacity in the country is more than 26,000 megawatts. But in summer 13-15,000MW is produced. In winter it is 8-9,000MW.
A large part of the power generation capacity is remain idle throughout the year. As a result, one has to pay a huge amount of center rent, which is known as capacity charge.
Earlier, on January 18 last year, a notification was issued to hike gas prices in all sectors except for residential, CNG-powered vehicles, fertilizer and tea industry consumption, which came into effect from February that year.
The previous price of gas for public, IPP and rental power generation plants was Tk 14 per cubic meter. The current price has been increased by 75 paisa per cubic meter to Tk 14.75.
The price of gas used in captive power plants, small power plants and commercial power plants was Tk 30 per cubic meter. In the same case, 75 paisa has been increased to Tk 30.75.
Analysis by the non-governmental organization Center for Policy Dialogue (CPD) says 41 per cent of capacity was idle last year. Meanwhile, in the last fiscal year 2022-23, more than Tk 26 ,000 crore had to be paid as capacity charges.
Experts feel that if huge amount of money was not paid in central rent, if low-cost power plants were run, if power plants were made on the basis of competitive tenders, the cost of production would not have increased so much. People used to get electricity at low cost.
The government is now raising electricity prices by bypassing the Bangladesh Energy Regulatory Commission (BERC). As a result, the public hearing does not review the issues of how much the cost is, where the cost can be reduced.
Consumer rights organization Consumers Association of Bangladesh (CAB) senior vice-president M Shamsul Alam told this correspondent that there is Tk 30,000 crore of predatory expenditure in the power sector. If it is being reduced, there will be no need to raise power prices. Meanwhile, fossil fuel prices will be adjusted as well.
Addressing this, Nasrul Hamid said, “If prices rise in the international market, domestic prices will increase accordingly. Similarly, if prices decrease in the international market, fuel prices here shall too go down. This synchronisation will also be effective from the first week of March.”
The government currently provides Tk43,000 crore in subsidies annually for electricity and Tk6,000 crore for gas, he noted. State Minister Nasrul Hamid said a notification in this regard will be issued soon to clarify the price adjustments.