‘Power price hike to increase household monthly cost by 9.4 pc’
Staff Reporter :
The recent power price hike will increase the monthly cost at the household level by an average of 9.4 percent; however, the soaring electricity price will hurt farmers most as their average monthly electricity expenditure to run irrigation pumps will increase by 11.02 percent.
The Centre for Policy Dialogue (CPD) revealed this information in a press conference on Wednesday.
CPD also estimated that households that paid Tk1,200 for electricity bills in 2023 will now have to pay Tk1,315 at the new rates. Bills for households are increasing from Tk 106 to Tk118 on average.
Furthermore, due to the new rates, SMEs will see an increase of 9.12 percent, businesses by 9.7 percent, and industries by 10 percent, as per the survey conducted by CPD.
Speaking at the briefing titled “Recent Electricity Price Increase: Are There Alternative Options for Affordability?” at the CPD office in Dhaka on Wednesday, CPD Research Director Dr. Khondaker Golam Moazzem said the rate at which electricity prices have increased is beyond the consumers’ tolerance.
The CPD Research Director also said, “The increase in capacity has outpaced the growth in electricity consumption significantly. While capacity has surged by double digits, consumption has only seen single-digit growth.
This disparity has been widening since 2018, posing a significant challenge, with capacity payments becoming a major concern for the government.”
He further stated that in the 2022-23 fiscal year, the government provided Tk39,500 crore in subsidies for electricity. During this time, capacity payments were nearly equal.
According to CPD, industries with higher electricity consumption will have to bear additional costs. Sectors like metal, minerals, furniture, paper, and pulp are expected to experience higher price hikes.
CPD believes this pressure on consumers is unjustified and should be addressed by the government or producers.
Noting that the government does not have a coherent subsidy coordination plan, Dr. Moazzem said, “The International Monetary Fund has suggested a price adjustment. According to the IMF, the price per kilowatt hour will be Tk12.11.”
CPD anticipates that with the current trajectory of price increments by the government, the price may reach Tk16.40 per kilowatt in the third phase.
Dr. Moazzem urged the government to unveil its subsidy coordination plan and refrain from imposing additional burdens on consumers.
The non-governmental research organisation has chalked out four key strategies, with special emphasis on transparent pricing policies, for the government to adopt in order to mitigate the impact of escalating electricity expenses beyond 2029.
The strategies include ensuring the phased shutdown of power plants targeted by the government, avoiding any new capacity charges, imposing ‘no electricity, no payment’ conditions for electricity purchases, and competitive initiatives to procure electricity through open tenders.
CPD also made a call to boost the use of renewable energy sources while charging consumers a minimal fraction to counter price inflation.
Meanwhile, on February 29, the government again increased electricity prices by Tk 0.34 and Tk 0.70 per unit through an executive order after the government assumed the role of fixing power prices by bypassing public hearings by amending the Bangladesh Energy Regulatory Commission Act.
Over the past 14 years, retail electricity prices have surged by around 130 percent through 13 price hikes, according to BPDB data.
In 2009, with a power generation capacity of 4,942 MW, electricity was priced at Tk3.73 per unit. Now, with a capacity of 29,174 MW, the price has surged to Tk8.95 per unit.
