Retail power price hike will worsen inflation: CAB

In less than two months after increasing the bulk power tariff, the Bangladesh Energy Regulatory Commission (BERC) has now proposed to increase the retail power price, triggering apprehension among consumers of further financial woes.

At a time when people are already struggling to make ends meet due to the price hike of almost all the daily essentials, BERC’s technical evaluation committee on Sunday recommended raising retail electricity prices by 15.43 per cent.

That will increase per unit price by Tk 1.10 from Tk 7.13 to Tk 8.23.

The Consumers Association of Bangladesh (CAB) has strongly opposed the recommendation, saying this hike will make inflation worse and public lives will become more difficult.

The recommendation was made at a day-long public hearing on the power price hike organised by BERC at the BIAM Auditorium in Dhaka.

BERC proposed the move after six state-owned power distribution bodies called for raising the power tariff by about 20 per cent at the retail level, arguing that they are incurring huge losses since the bulk electricity tariff increased by 19.92 per cent on November 21 last year.

The six companies are Bangladesh Power Development Board (BPDB), Bangladesh Rural Electrification Board (BREB), Dhaka Power Distribution Company Ltd (DPDC), Dhaka Electric Supply Company Ltd (DESCO), Northern Electricity Supply Company PLS (NESCO), and West Zone Power Distribution Company Ltd (WZPDCL).

At the hearing, the companies admitted that they will not be able to provide an uninterrupted electricity supply to the consumers even after increasing the retail price.

Uninterrupted power supply depends on how much energy the Energy and Mineral Resources Division supplies to the power plants, they argued.

Speaking at the hearing, CAB Senior Vice President Professor M Shamsul Alam said the retail price hike proposal should not be considered until the division guarantees uninterrupted fuel supply to the power plants.

Meanwhile, Dhaka Mass Transit Company Ltd (DMTCL) and Bangladesh Hi-Tech Park Authority (BHTPA) have demanded affordable power supply from distributors.

In response, BERC agreed to consider DMTCL’s proposal for the sake of public interest but rejected the BHTPA pitch as the parks are profitable organisations.

At the hearing, BERC Chairman Md Abdul Jalil said, “We are going through a bad time. BERC considers the public interest first. Before taking a decision, we consider how it may affect the country’s people.”

As per the latest statistics, the financial loss of state-owned BPDB is likely to increase by Tk 18,094 crore in one year.

According to BPDB’s own latest estimates, the financial loss will cross Tk 48,000 crore in FY2022-23 from Tk 29,915 crore in FY2021-22.

The BERC technical committee said that BPDB is now selling electricity at Tk 7.75 per unit. The regulator has recommended an increase of Tk 0.99, or 15.61 per cent, to Tk 8.74 per unit.

BREB claimed that it incurred a loss of Tk 524 crore in FY22 and forecasted a loss of Tk 5,869 crore in FY23 due to the rise in wholesale price. It said an increase of 20.29 per cent or Tk 1.35 per unit is required for adjustment of losses.

However, BERC recommended a 14.74 per cent price hike for BREB, increasing the price from Tk 6.65 to Tk 7.63 per unit.

Similarly, DPDC, DESCO and NESCO claimed, respectively, Tk 1,551 crore, Tk 1,402 crore and Tk 535 crore in annual losses.

WZPDCO did not give any financial statement but it said it would suffer if prices do not rise.

Presenting arguments on behalf of the public at the hearing, Professor Shamsul asked BPDB if they would be able to provide an uninterrupted supply of electricity after the tariff hike.

In reply, BPDB officials said it depends on the energy division. “If they can provide uninterrupted fuel, we will be able to provide electricity,” they said.

Addressing the BERC, Shamsul said, “I request not to increase the price until the energy division guarantees uninterrupted fuel supply.”

The retail power tariff was last raised in March 2020, on average by 5.3 per cent from Tk 6.77 to Tk 7.13 per unit.

Officials said the Power Division is under tremendous pressure from the Finance Ministry to raise power tariffs at the bulk and retail levels to cover huge financial losses.

The recent commitment of the International Monetary Fund to provide a $4.5 billion loan has also increased the pressure as the global lender has tagged a condition to decrease subsidy in the power sector and raise power tariffs to cover the losses, said a Power Division official.