The Bangladesh Energy Regulatory Commission’s (BERC) technical committee has recommended increasing bulk electricity prices by 57.83 per cent without fixing natural gas prices first.
The recommendation was made on Wednesday during a public hearing on the Bangladesh Power Development Board’s (BPDB) proposal to raise bulk electricity tariffs by 66 per cent.
Energy experts said the proposed hike was unreasonable without adjusting gas prices first as 48 per cent of the country’s electricity comes from gas-fired power plants.
The business community also expressed their concern, saying many of them cannot afford gas and electricity even at the existing prices. They said many factories would be closed if electricity prices rose.
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At present, BPDB’s wholesale electricity price is Tk 5.17 per unit, which was set by the BERC in February 2020. BPDB has now proposed increasing prices to Tk 8.58.
After evaluating the proposal, the BERC technical committee recommended keeping the existing prices, provided government subsidies continue. It also recommended increasing prices to Tk 8.16 if there are no government subsidies.
During Wednesday’s hearing, BPDB said the government had provided subsidies of Tk 8,000 crore in the fiscal year 2020-21.
In its proposal, BPDB said the cost of generating electricity from oil (diesel and furnace oil) has gone up due to an insufficient supply of gas.
The average production cost in FY20 was Tk 2.13 per unit, which went up to Tk 3.16 in FY21 due to the increase in crude oil and coal prices. Production cost will stand at Tk 4.24 in FY22, BPDB said.
BPDB said it would face a loss of around Tk 30,251 crore in this financial year if wholesale electricity prices were not increased.
A controversy has already arisen over holding public hearings on raising electricity prices without fixing gas prices first. Energy expert Professor M Tamim described this as totally unreasonable.
He said prices would have to be increased if the government withdrew electricity subsidies.
“But that is not possible, and subsidies must be provided. As a result, the proposal to increase prices at this moment is unreasonable because it will seriously impact the market,” he told The Business Post.
At Wednesday’s hearing, BERC Chairman Abdul Jalil said with rising prices came the issue of government policy, which was a matter of documentary evidence.
“The process is continuing. In the end, gas prices will be decided,” he said.
He also said the commission was holding a public hearing on the electricity price adjustment proposal due to legal reasons.
“The announcement of wholesale prices will have an impact on retail prices, but we did not receive any proposal from distribution companies. If the government continues paying subsidies, there is no chance of increasing bulk power prices,” Jalil added.
Consumers Association of Bangladesh Energy Adviser Professor Shamsul Alam also described BPDB's proposal as unreasonable, saying Petrobangla did not even promise to supply 850mmcfd liquefied natural gas (LNG) and that was why the power plants did not get enough gas.
“As a result, their costs have increased. The people have paid Petrobangla extra in gas prices. There should be an agreement between Petrobangla and BPDB on electricity prices. There is no opportunity to impose this on the people,” he explained.
Bangladesh Knitwear Manufacturers and Exporters Association Executive President Mohammad Hatem told The Business Post manufacturing costs would go up if gas and electricity prices increased.
“But buyers will not pay extra. As a result, we will lose the market, meaning many factories will shut down.”
BERC members Maqbool E Elahi Chowdhury (gas), Bazlur Rahman (power), Abu Faruk (finance and administration), and Md Kamruzzaman (petroleum) were present at the hearing, among others.
