Power price hike on the horizon

While the War in Europe is taking twists with no sign of an end any time soon, the impact of the conflict has already started to manifest in a plethora of economic woes. Like many other countries, especially developing ones, Bangladesh is also feeling the pinch of the war in disrupted supply chains, high inflation, abrupt price hike of fuel and steady decline of forex reserves.

While the record price rise of fuel took into form a little more than month ago, there are rumblings now that power sector may also experience a 20 per cent price increase.

As per report published in this newspaper on Saturday, Bangladesh Energy Regulatory Commission (BERC) indicated that the power prices might increase by around 20 per cent. The decision may come on 13 October.

However, the price will not be directly imposed on consumers. The six power distribution companies have to pay the additional price that will ultimately lead to the hike in power price at retail level.

As it is, due to the Ukraine War, the country is fraught with problems while the reported inflation is 8 per cent. At such a stage, when the masses are struggling to make ends meet, sudden hike in power will come as an added burden.

Reportedly, in 2023 fiscal the Bangladesh Power Development Board (BPDB) would incur a deficit of Tk24, 000 crore. The Finance Division was supposed to pay Tk17, 000 crore as subsidy and the remaining Tk7, 000 crore would come through power price hike.

However, BPDB says the deficit will be over Tk17, 000 crore in FY23 due to a sharp rise in energy and dollar prices even after subsidies.

Electricity price saw a rise in February last and the government has increased the rate nine times; wholesale price has increased by 118 percent and 90 percent at the consumer level.

Gas price was hiked by nearly 23 percent last June and on 06 August, fuel oil prices were increased due to load shedding. The price of diesel has been increased by 42 and a half percent and petrol-octane by 51 percent affecting daily life of common people.

BPDB says power generation cost has gone up by 34 percent due to primary energy price hike in global market and import duty on furnace oil and coal last year.

BPDB sells per unit bulk electricity for Tk5.17 but the cost is now more than Tk9. As a result, BPDB incurred a loss of Tk30, 000 crores in the FY-22.

Understandably, price hike will add to the already existing economic travails of the people; therefore, to minimize the burden, the government may concentrate on harnessing solar and hydro power.

Instead of going for the reported 20 per cent price rise, the government may adopt a gradual increase policy, starting with 5 per cent at first and see the result.

Although assurance has been given that the general consumer will not be affected, a prudent move would be to go slow in raising the rates.

The reality at the moment is harsh and despite taking a positive outlook, one cannot deny that the world is sliding towards a recession.

Energy conservation will be a priority which this country is currently going through. In a spirit of austerity, all sorts of extravagance needs to be spurned while efforts made to seek alternative ways to get power.

A period of hardship is a catalyst for innovative ideas. Bangladesh has passed even harder times in the past and the stoicism of the nation will be called to action once more.