Unbridled power tariff hike

Prices of electricity and fuel oil are galloping like an un-reined steed never ever seen in the country before. People are already grappling with raging inflation, the dollar crisis, restrictions on imports and so on. With each passing day, life is getting harder.

Amid such a burden of life, electricity price has been hiked again within 18 days of its rise on 12 January.

The announcement came on 31 January like a shell shock especially to wage earners and commoners as the rise in the price of electricity will push up prices of daily essential items further. People are yet to absorb the shock when on 12 January retail power tariff was hiked by five per cent. It was then said only five per cent. The word ‘only’ conveyed a message that commoners might have failed to make out. It was understandable from the words of the people sitting at the helm of the state that we would have to swallow another hike in electricity prices in the not-too-distant future.

But little did people know that it would come so soon. On January 30 (Monday) dropping a hint at hiking the electricity price State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the government would have to increase the price of power if it was to cut back on subsidies. Nasrul Hamid said: “We will adjust gas and electricity prices every month, if needed, to keep up with the international market. In that case, if prices decrease in the global market, it will also drop here.”

What the minister said had rarely happened in our country. Once the price goes up we barely see it coming down. This trend is ingrained in our political culture so much so that it really sounds unbelievable. People will put their faith in such words if only examples are created. We have to wait and see for that to happen.

But before such words come true people will undoubtedly become exasperated with the present conditions that might finally lead to an unbearable and insufferable situation for them. The Business Post on January 01 published a report on the price hike of power. The report quoting experts said such hikes in such a short period were rare and unprecedented in the history of Bangladesh. In 14 years retail power tariffs had been increased 12 times.

Such hikes not only affect people’s lives adversely they also put the government in trouble. The Business Post has recently published news on how the government’s revenue collection is hampered because of rise in power and fuel oil prices. When revenue collection drops with people cutting back on consumptions to cope with the expensive life for survival, the government too finds it difficult to run the day-to-day state affairs.

Professor M Shamsul Alam, Senior Vice-President of Consumers Association of Bangladesh (CAB), told The Business Post that the government’s strategy of raising money this way could be counterproductive.

He further said: “I think frequent energy price hikes will have a negative impact on revenue collection. When price increases, consumption and public expenditure fall. It will also hit VAT and tax collection.”

The decision to hike the prices of power and fuel oil in a short period might have been taken by the government to follow the prescription of the International Monetary Fund (IMF). Apparently going to the IMF to save the trouble-torn economy seems to be the right decision to many in the corridor of the government but it may spell more disaster if it pushes people to extreme misery.

The IMF reportedly set the condition of removing subsidies on the power and energy sector for the approval of a loan of $4.5 billion. Borrowing money from the IMF to save the economy and face the ongoing crisis is not the ultimate solution. A temporary solution to the existing problem will only add to the woes.