Power price likely to go up by 20%

After the natural gas and oil price hike, bulk electricity price is likely to go up, much to the chagrin of common people.

Bangladesh Energy Regulatory Commission (BERC) indicated that the power prices might increase by around 20 percent. 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.

The country is already fraught with manifold problems because of the Russia-Ukraine war that has already pushed up inflation by 8 percent. Common people are struggling with high deficit between income and expenditure.

Under this context Consumers’ Association of Bangladesh (CAB) opposed the electricity price hike plan as it will further deepen the crisis. CAB wrote a letter to BERC last July requesting not to increase electricity price.

Professor Shamsul Alam, Senior Vice President of CAB said the government was using the power sector to make money and common people were suffering. If the government reduced extra expenses there would be no need to hike power price.

Earlier, the Power Division in the FY23 said 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 the FY23 due to a sharp rise in energy and dollar prices even after subsidies.

BPDB is the lone state-run bulk electricity buyer from power producers and suppliers to six distribution companies.

BPDB proposed an average 66 percent hike in wholesale prices to BERC last January arguing that the power generation cost had increased.

BERC held a public hearing on the proposal on 18 May. The BERC’s technical committee there said if subsidy was not given in the national budget electricity price would have to be increased by 58 percent.

According to the BERC law, the new decision has to be announced within 90 working days after the public hearing which has already passed.

Several BERC officials told The Business Post that there was widespread criticism after the record fuel price hike last August. Earlier the government increased the natural gas price by around 23 percent.

The government is taking some time to increase the electricity price to avoid public resentment.

Recently State Minister for Power, Energy and Mineral Resources Nasrul Hamid has told reporters that the government is trying to run the power sector with subsidy for the time being.

A few days ago, Cabinet Secretary Khandaker Anwarul Islam also told the media that the government didn’t want to increase electricity price for the time being. This correspondent failed to reach Nasrul Hamid over mobile phone for his comment after several attempts.

Rezaul Karim Khan, the Director of BERC (Power), told The Business Post that BPDB might have a deficit of around Tk24,000 to Tk34,000 crore. Of the deficit, Tk17, 000 crore is expected to be managed from subsidy while the rest will be adjusted from price hike.

The distribution companies will not be able to bear the price increase because they, other than REB (Rural Electrification Board), are not making much profit.

So they are going to apply to BERC for an increase in the retail price. Rezaul Karim Khan hinted that the government would take at least 3 months in this case after bulk price hike.

BERC Member (power) Mohammad Bazlur Rahman told this correspondent that the final scrutiny had been done to raise the electricity price at tolerable level. The order will be announced within the stipulated time.

A member of BPDB said the government, at first, would increase price of commercial connections before bulk price announcement.

Even after that if the distribution companies continue to count loss then the government will try to reduce costs by increasing load shedding. However, if the loss cannot be prevented then price will be increased at common consumer level.

The electricity price was last increased in February 2020. The government has so far increased power price 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.