Home ›› 01 Feb 2023 ›› Front
The government has increased electricity prices again after only 18 days, which came as another shock for consumers already grappling with soaring inflation and skyrocketing commodity prices.
The latest hike was announced on Tuesday. The bulk power tariff was hiked by 8 per cent and retail tariff by 5 per cent through an executive order issued by the Ministry of Power, Energy and Mineral Resources.
The new tariffs will be effective from today. Due to the hikes, average power prices at the retail level will be Tk 7.85 per unit this month.
Energy experts, consumers, and the business community have expressed concern about the frequent and unprecedented energy price hikes. Consumers particularly fear their suffering will intensify further.
Earlier on January 12, the government increased retail power tariffs by around 5 per cent. On January 18, it hiked natural gas prices to unprecedented levels.
Such hikes in such short periods are rare in the history of Bangladesh, said experts. In 14 years, retail power tariffs were increased 12 times and wholesale tariffs 10 times.
Professor M Shamsul Alam, senior vice-president of the Consumers Association of Bangladesh, said the government’s strategy of raising revenue this way could be counterproductive.
“I think the frequent energy price hikes will have negative impacts on revenue collection. When prices increase, consumption and public expenditure fall. It will also hit VAT and tax collection.”
Meanwhile, amid extreme shortages of forex reserves, the government is borrowing $4.5 billion from the International Monetary Fund (IMF). The Washington-based international lender approved the loan on Monday.
To approve the loan, the IMF earlier gave the condition to remove subsidies from the power and energy sectors. To fulfil the condition, the government amended the BERC Act 2003 to increase power and electricity prices as well as reduce subsidies.
Prior to the amendment, only Bangladesh Energy Regulatory Commission (BERC) had the power to adjust energy prices after consulting with stakeholders through public hearings. But the government felt the necessity to amend the law after its bid to raise fuel prices in August last year was challenged in the High Court.
Addressing the possibility of increasing power prices on Monday, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said, “We have already said that if we want to cut back on subsidies, we have to increase prices.”
“We will adjust gas and electricity prices every month if necessary to keep up with the international market. In that case, if prices decrease in the global market, it will also drop here.”
Bulk power prices last saw an increase of 19.92 per cent on November 21 last year as part of the government’s efforts to scale back hefty subsidies amid a global energy crisis fuelled by the Russia-Ukraine war.
Commenting on the matter, Bangladesh Knitwear Manufacturers and Exporters Association Executive President Mohammad Hatem said the government had taken all kinds of initiatives to increase both consumer and industrial expenditures.
“At a time when everyone is struggling to survive amid high inflation, unemployment, and low export orders, the government increased gas prices by up to 179 per cent. It raised electricity prices twice within 18 days. How will the country afford it?”
Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan said the government is making things more difficult for business owners.
“Our exports will go down further, but workers will demand an increase in wages to survive. How can we give them a raise if we cannot earn enough? I think the situation will lead to massive worker unrests across the country.”
The power tariffs for different customers have been adjusted based on the supply pressure, which ranges from low to medium to high to ultra-high. Additionally, consumers must pay the demand charge for each type of connection along with a 5 per cent VAT on the total bill.
The government raised the demand charge at the retail level by Tk 10-15 on January 12 and will leave it unchanged this month.
The new rates will be applicable to residential, commercial, and industrial customers; irrigation or agricultural pumps; small-scale industries; construction and education sectors; religious as well as charitable institutions; hospitals; and battery charging stations.
The minimum power price for lifeline users has been set at Tk 4.14 per unit, up from Tk 3.94. The maximum price – applicable to temporary commercial consumption – will rise by Tk 0.84 to Tk 17.64. Pumps used for irrigation or agricultural work will be charged Tk 4.59 per unit, up by Tk 0.12.
The flat rate for small-scale industries is now Tk 9.41 per unit, which earlier was Tk 8.96. The off-peak rate has been fixed at Tk 8.46 per unit while the peak-hour rate will climb from Tk 10.75 to Tk 11.29.
The flat rate for commercial and office spaces has been set at Tk 11.36 per unit, up from Tk 10.82. The off-peak rate has been set at Tk 10.22 per unit while the peak-hour rate will jump from Tk 12.98 to Tk 13.63 this month.
Besides, consumers in medium, high, and ultra-high pressure categories will have to pay more per unit. High-pressure industrial users will have to pay an increased flat rate of Tk 9.31 per unit, an off-peak rate of Tk 8.39, and a peak-hour rate of Tk 11.64.
Bangladesh Power Development Board will sell electricity to distribution companies at an average rate of Tk 6.70 per unit in February, compared to Tk 6.20 in January.
