Double whammy for commoners

The government is mulling over a plan to hike wholesale and retail electricity prices again while people are still in the grip of the oil price shock.

After the unprecedented oil price hike in August common people are still reeling from the distress. Before they overcome it once again power price hike will come as a double whammy.

The instability created in the domestic market after the oil price hike in August has reduced the buying capacity of common people so much so that lower and middle income people are struggling to make ends meet.

The government has already started a campaign to increase the wholesale and retail electricity prices again.

Bangladesh Energy Regulatory Commission (BERC) confirmed The Business Post that the new bulk electricity price might be announced next week.

The same week the six state-run power distribution companies will apply to BERC to increase the retail electricity prices at consumer level.

Bikash Dewan, Managing Director of Dhaka Power Distribution Company (DPDC), said: “We couldn’t submit the proposal to BERC to increase the retail price of electricity during the BPDB public hearing on May 19.”

Md Azharul Islam, Managing Director of West Zone Power Distribution Company (WZPDCL), told The Business Post that their company was counting a loss of Tk9 crore in the FY 22.

“If the wholesale price increases, the revenue shortfall will increase too. We don’t want profit, we want to reach the breakeven point,” said Azharul Islam.

The government officials did not want to open their mouths about how much price increase will be proposed at retail level. A senior official of the Rural Electrification Board (REB) on condition of anonymity said instructions had been received from the Power Division to submit proposal to increase retail prices.

“Our preparation is almost at the last stage and we can submit it anytime soon. However, if the wholesale price does not increase, we will not increase it.”

Insiders say the government is going to hike electricity prices to meet the condition set by the International Monetary Fund (IMF).

The IMF granted loan of $4.5 billion on conditions that include subsidy cut in the power sector to overcome the economic crisis of Bangladesh. However, BPDB officials did not want to admit the fact.

BPDB Member (Planning and Development) Dhurjati Prasad Sen told The Business Post that the primary energy cost had gone up and PDB cost is rising gradually. That is why the government is trying to raise the electricity price.

Meanwhile, BERC member (Administration) Mohammad Abu Faruque told The Business Post that BPDB had applied to review the proposal to increase the bulk price. “We are already convinced. BERC held a meeting and decided that the new prices would be announced next week.”

Abu Faruque dropped a hint that bulk price may increase by 20 percent.

In last February in 2020 BERC set per unit wholesale electricity price at Tk5.17. BPDB requested a 66 percent price hike from Tk5.17 to Tk8.58 per unit in January this year.

A public hearing was held on the proposal on 18 May. On 13 October, BERC rejected the BPDB price hike proposal. That time it was said if any party was aggrieved by the order of the commission, there was an opportunity for a review within one month.

BPDB made the best use of that opportunity by appealing to increase the price on 13 November.

But BERC dismissed the appeal of Bangladesh Power Development Board (BPDB) the same day.

While proposing to hike bulk electricity price BPDB said the electricity generation from liquid fuel had increased due to natural gas shortage.

That is why the per unit average generation cost is now Tk9.5. If the wholesale price does not increase, there will be a loss of Tk30, 251 crore in 2022.

However, the government has tried to reduce energy cost through load shedding over the last three months.

Most of the industrial and countryside consumers do not get enough power supply. That’s why the manufacturing industry is suffering severely, said industry owners.

According to the law, BERC will have to announce the decision over the price within 90 days of the public hearing.