Bangladesh Power Development Board (BPDB) has proposed to raise the bulk tariff of electricity by 23.28% from next year to tackle massive financial deficit.
However, the Bangladesh Energy Regulatory Commission (BERC), to which the proposal was placed, has recommended raising the prices for bulk consumers by 19.50%.
The proposals were discussed at the TCB auditorium in Dhaka on Thursday, the first day of a four-day mass hearing on power tariff hike proposals.
The BPDB and six other state-run power distribution companies wrote to the BERC between October 15 and 23, proposing another power tariff hike. Most of these companies cited “income deficit” as the reason behind wanting to raise the tariff.
The Power Grid Company of Bangladesh Ltd (PGCBL) asked the BERC to also increase transmission or wheeling charges — a currency per megawatt-hour amount that a transmission entity receives for the use of its system.
At the hearing, the BPDB officials said that the other reasons why it wanted to increase bulk tariff of electricity are increase in liquid fuel, coal and gas prices, growing outstanding bills, depreciation of taka against foreign currencies, flawed forecasting of power demand, and lack of annual adjustment of tariff by the BERC.
Bulk tariff is the rate at which the BPDB procures power from various power plants. Purchase rates are calculated for each power plant and details of the rates are given in the respective Power Purchase Agreement.
During Thursday’s hearing, BPDB General Manager (Commercial Operation) Md Kausar Ameer Ali said supply costs for bulk consumers were Tk5.83 per unit in the 2018-19 fiscal year.
“Currently, a unit of bulk electricity is priced at Tk4.77. Due to the difference between the bulk price and supply costs, the BPDB incurred a Tk6,862.3-crore loss in the last fiscal year,” he said.
“But we want to raise the tariff to Tk5.88 per unit from January 1, 2020. If we continue the existing bulk prices, the sum of deficit will reach Tk8,560.6 crore,” he added.
Kausar said they wanted to raise the tariff by Tk1.11 per unit.
The BERC technical evaluation committee, on the other hand, said the deficit can be overcome if the bulk tariff is raised by 19.5%.
Meanwhile, the PGCBL, the country's leading transmission company, has proposed to raise the transmission charges by 52% in 2020.
The evaluation committee, however, proposed to raise the transmission charges by 6.92%.
On December 1, the hearings for the retail prices will be held.
The BPDB’s proposal will be heard from 10am to 1pm. After an hour-long break, the hearing on the proposal of the Northern Electricity Supply Company Ltd will be held.
Power tariffs were last hiked on November 23, 2017. At that time, BERC on an average had raised the tariff by 5.3% or Tk0.35 per unit at the retail level, after hearing proposals of different state-owned companies between September 25 and October 5.
Bulk power consumers were exempted then. BERC last raised the power tariff for bulk consumers on September 1, 2015, by Tk0.23 per unit.
The wheeling charges were last raised on August 27, 2015, to Tk0.2744/kWh at 230kV lines, Tk0.2768/kWh at 130kV lines, and Tk0.2791/kWh at 30kV lines.
PGCBL Managing Director Golam Kibria said introduction of source tax on wheeling charges, same transmission charges for the last four years, lower income rates, undertaking self-funded projects, growing expenditures, and low income during winter are the reasons why they seek to raise the charges.
Taking a u-turn
After announcing the new gas prices under eight categories on June 30, BERC Chairman Monowar Islam had said there was no possibility of power tariffs increasing.
“We may not need to increase power prices, if the BPDB adjusts the production cost… But if the BPDB makes any proposal, we will consider that,” he said then.
On October 12, the BPDB officials at a day-long workshop also said there was no need to increase the power tariffs since the average production cost had decreased.
When asked about it during Thursday’s hearing, the BERC chairman defended himself saying: “We do not increase the tariff of power and gas on our own. We do it all following the BERC law.”
Terming the latest hike proposals illogical, Consumers' Association of Bangladesh (CAB) Energy Adviser Prof Dr M Shamsul Alam alleged that the rising expenditure in the power sector was not under the government’s control.
“They [the electricity companies] are saying that they want the rising bulk power generation prices to be adjusted. But the BERC must have verified if their claim of income deficit was logical,” he said.
The energy expert blamed “unplanned expansion of the power and energy sector.” “Through unnecessary value addition, the government has pushed up its spending in the sector,” he added.
He feared the consumers would suffer if electricity got costlier.
Bangladesh currently has an installed capacity of generating 22,562MW electricity, according to the BPDB.
In winter the demand hover around 6,000-7,000MW, causing a significant number out of 136 power plants to sit idle.
Bangladesh Garment Manufacturers and Exporters Association leader Anwar Hossain Chowdhury said the power tariff, if increased, will take a heavy toll on the readymade garment industry.
“We fear losing global competition, leading to shutting down of many factories. If so, thousands of workers will become unemployed,” he said.
