The move will make general people’s lives expensive, says consumer rights activists
The regulator can now revise energy and fuel prices multiple times in a fiscal year as the House has passed an amendment to the law.
Consumer rights activists and experts, however, say the move will make general people’s lives expensive through increasing the tariffs on gas and electricity.
On Wednesday, Parliament passed the Bangladesh Energy Regulatory Commission (Amendment) Bill, 2020, which means the prices of power, gas, diesel, petrol and other energy material can now be changed more than once a year.
In the opinion of consumer rights activists and energy experts, the move may deal a serious blow to the country’s economy as the amended law does not stipulate how many times the tariffs can be changed in a single fiscal year.
The government, however, maintains that the amendment is not meant to increase tariffs as it can reduce prices as well.
Moving the bill in the House, Minister of State for Power, Energy and Mineral Resources Nasrul Hamid said the amendment was needed owing to the speedy transformation into the fuel supply chain of late.
On a separate note, he said: “Tk52,000 crore is not subsidy; it is investment instead. Had it not been done by the prime minister, there would not be any growth.”
A few opposition lawmakers opposed the bill, though.
In February, Nasrul informed Parliament that the government had provided Tk 52,260 crore in subsidies for the power sector in 10 years.
In December 2019, the cabinet cleared the draft amendment, before it was tabled in Parliament on June 23 this year.
It has since been criticized by political parties, economists, energy experts and consumer rights bodies.
The tariff determined by the commission shall not be revised more than once in a fiscal year, unless there is a change in the prices of energy, including any other changes, notes Section 34 (5) of the original version of law passed in 2003.
Former energy secretary M Fouzul Kabir Khan said the amendment was not logical amid the coronavirus pandemic, with a second wave of the crisis looming large.
“In case of electricity, we may not expect people to reap benefits from the law any longer. They have no option to stop consuming power when it gets pricier, to save some money,” he said.
Also, the amended law would leave the poor and marginal people in trouble at a time when Bangladesh is contemplating 100% electrification across the country, he said.
Buet’s Professor M Tamim, who served as energy adviser in the 2008-9 caretaker administration, agreed with Khan’s assessment.
“The most crucial part about the law now is how many times the changes can be done.
“To me, more than twice will never be logical,” he said, adding that unplanned investment in the power sector was responsible for the situation.
There should have been a five-year moving plan, to make a better projection for smooth growth in the power sector, Tamim opined.
M Shamsul Alam, energy adviser to the Consumers' Association of Bangladesh (CAB), said that rising expenditure in the power sector was not under the government’s control.
“The government has failed to stop it. It is also failing to stop the irregularities in the power sector,” he said, and observed that the new law would allow corruption to reign supreme and deficits to expand further.
“By only checking graft, the government can save Tk12,000 crore from the gas sector, Tk10,000 crore from the power sector, and Tk1,000 crore from the coal sector,” he said.
Continued gas and power tariff hikes would take a heavy toll on the people and adversely impact the economy, he warned.
According to Alam, the amendment was brought in only to serve the interests of the government, not the people.
The energy regulator has revised power tariff at least five times at the retail level and thrice for bulk users in the last 10 years.
On the other hand, gas prices have been hiked five times since 2009. In 2017, the BERC had hiked gas prices twice through a single order, violating the law.
It finally retreated from the decision after the High Court declared the decision as illegal.
Asked about the spiralling expenditure in the sector, Minister of State for Power and Energy Nasrul recently said there was no alternative to increasing gas tariffs to adjust them to the prices of imported gas.
“But tariff hike once a year is a must in case of imported gas. It may even require two hikes to adjust the prices,” he said at the time, referring to India, where he claimed power tariff changed every month.
Also, if gas became pricier, it would push up power tariff as well, he maintained.
Regarding the mammoth Tk15,000 crore capacity payment paid last year when a number of power plants were sitting idle, Nasrul said: “The sum had to be paid. We need to pay the money [capacity payment] for the power plants.
“We have to be ready for maximum output from the sector in future,” he said, and stressed that there was nothing to be worried about regarding the new draft law.
The Bangladesh Power Development Board paid Tk15,000 crore to power plants for capacity payment last year. The amount may shoot up to Tk20,000 crore this year.
Earlier, Prime Minister Sheikh Hasina hinted that her administration planned to cut back on subsidies for the power sector.
"It's not always possible to give subsidies … everyone should keep that in mind," she said while inaugurating two power stations and several other power infrastructures in August this year.
Urging all to maintain austerity in electricity use, she said the actual cost of power generation was much higher than price per unit at the consumer level.