Despite the ongoing severe gas crisis, failure to supply power uninterrupted and shortage of fresh water, the government is now planning to hike the prices of these most essential utilities at a time when people are already extremely suffering due to the rising inflationary pressure.
Raising the utility prices will only have a further negative impact on the daily expenditure of the general people and will not do any good in the long run, people concerned have opined.
According to sources, several ministries and departments of gas, power and water are working on introducing an initiative to adjust fuel prices in line with the international market. This, however, comes at a time when private fuel importers are already pressuring the government to hike fuel prices.
According to the available reports, in the last 14 years, electricity prices have increased by 121 per cent while natural gas prices went up by 175 per cent.
Apart from this, the mass-used diesel price increased by around 237 per cent. On the other hand, Dhaka WASA has increased water prices 14 times during the same period.
Earlier, the Bangladesh Energy Regulatory Commission (BERC) used to fix the energy prices through public hearings, which had left no opportunity to increase the tariffs as desired.
However, since last year, the government has been increasing energy prices by executive order. After that, power tariffs went up by 15 per cent and gas prices rose by 179 per cent.
Power price hike before Ramadan?
A Bangladesh Power Development Board (BPDB) report shows that the cost of per unit electricity generation was Tk 2.50 in 2009, and it’s now at Tk 12. The average retail electricity price also increased from Tk 3.73 to Tk 8.25.
The government heavily subsidises due to the higher generation cost, as BPDB is suffering heavy financial pressure on top of its struggle to pay the bills to private power plant owners.
As a condition of the $4.7 billion loan from the International Monetary Fund (IMF), which was granted last year, the power and energy sector must be completely de-subsidised. The government has been trying to stop subsidising this sector for a long time.
According to a Power Division source, electricity prices may increase before Ramadan, which begins next month.
A BPDB review has found that electricity prices could increase by an average of 78 per cent if the subsidy is withdrawn and retail per unit price will go up by Tk 14.68.
BPDB has recommended that a step-by-step price adjustment will be affordable for the public.
Power Cell Director General Mohammad Hossain claimed, "Despite the increase in wholesale electricity price, BPDB is counting a loss of Tk 3-4 per unit. The six power distributors across the country are now suffering losses. Electricity price needs to be increased.”
Consumers Association of Bangladesh’s (CAB) Energy Adviser Professor M Shamsul Alam told The Business Post that even if the private power plants are not producing electricity, they are benefiting from capacity payments. “This is creating a burden on the power sector and leaving people suffering.”
Gas price hike soon
The process of increasing natural gas prices has started once again because of the high-cost import of liquefied natural gas (LNG). Energy and Mineral Resources Division officials hinted that a notification in this regard may be issued soon.
Industry, power and commercial gas prices may increase by 48 per cent to 95 per cent, they said.
Titas Gas Transmission and Distribution Company, the household gas distributor, increased the monthly prepaid meter rent from Tk 100 to Tk 200 in January this year.
Meanwhile, in an application sent to BERC, six gas distribution companies proposed to hike the price of gas from Tk 990 to Tk 1,380 for one stove and from Tk 1,080 to Tk 1,592 for two stoves.
However, none of the companies can guarantee uninterrupted gas supply — a crisis plaguing most of the country at the moment.
BERC Chairman Mohammad Nurul Amin said, "The technical committee is working on the proposals from the distribution companies. Necessary action will be taken in this regard after we get the committee’s report.”
By pledging to supply gas without interruption, last year, the gas prices were hiked by 179 per cent. But still gas is not available as per demand.
At present, the country’s daily demand for gas is around 4,000 million cubic feet, but the supply is only an average of 2,600 million cubic feet. The severe gas crisis is hampering industrial production heavily.
Water price hike proposal
Dhaka WASA has increased the water price 14 times in the last 14 years. Recently, it has again proposed to increase the price by 24 per cent to 147 per cent depending on the area of the capital.
However, urban planners say that by increasing the water price, WASA is trying to put the responsibility for its mismanagement and irregularities on the shoulders of the people as the actual production cost is low.
Former Dhaka WASA chairman Professor Nazrul Islam said that the water price hike proposal is unacceptable as the cost of living is rising on all sides.
Spiral effect of inflation
Bangladesh has witnessed high inflation throughout the last year due to the US dollar crisis and the depletion of the foreign exchange reserves. In May last year, the country witnessed the highest inflation in a decade — 9.94 per cent.
After that, the inflation rate saw a downtrend, but the food inflation rate was at 12.5 per cent in October last year, which Bangladesh has not seen in over a decade.
However, the Awami League government, which came to power for the fourth consecutive term last month, has given bringing down inflation top priority.
Talking to The Business Post, Centre for Policy Dialogue’s Senior Research Fellow Towfiqul Islam Khan said that raising the utility tariffs will only push the cost of living up further. However, only adjusting the prices without removing the structural weaknesses in the power and energy sector will not bring any solution, he added.
He said, "Structural problem means that our power sector is increasingly dependent on imports, like high-cost LNG. There is also the problem of overcapacity and capacity charge. Solving these problems first and then adjusting the prices will have a positive effect.”
