Retail tariff hiked by 5.3%, wholesale 8.4%
Both retail and bulk consumers have to pay more from the coming month as the government has increased the price of electricity by Tk0.36 and Tk0.40 per unit respectively, despite vigorous opposition from different quarters.
Bangladesh Energy Regulatory Commission (BERC) on Thursday announced the increase in power tariffs supporting proposals placed by Bangladesh Power Development Board (BPDB) and six state-run power distribution companies.
The new prices will be effective from March 1, said BERC Chairman Md Abdul Jalil at a press conference at the energy regulator’s office in Dhaka.
Currently, the retail price of each unit is Tk6.77. And now, the price will leap on a weighted average by 5.3% to Tk7.13.
Similarly, the bulk electricity price will shoot up on a weighted average by 8.4% to Tk5.17 from Tk4.77.
BERC also increased transmission charges to Tk0.2934/kWh, a 5.3% rise from Tk0.2787/kWh.
This is the fifth hike of power price at the retail level since the Awami League came to power in 2009. And the bulk price hike is the third one since then.
The last time, power tariffs were hiked on November 23, 2017. At that time, the BERC on average had raised the tariff by 5.3% or Tk0.35 per unit at the retail level.
However, bulk power consumers were exempted then. The energy regulatory body 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 for 230kV lines, Tk0.2768/kWh at 130kV lines, and Tk0.2791/kWh at 30kV lines.
Bulk tariff is the rate at which 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.
A wheeling charge is a currency per megawatt-hour amount that a transmission entity receives for the use of its system.
During a four-day public hearing on the power tariff hike proposals, the BPDB and six state-run power distribution companies demanded the electric prices be increased from January 1.
The power companies sought the hike, citing a growing income deficit. But consumer rights activists and experts, during the hearing, said the government could avoid increasing tariffs by checking “unnecessary” expenditure and graft in the power sector.
‘BERC fails to serve interest of consumers’
When contacted, Consumers' Association of Bangladesh’s (CAB) Energy Adviser Prof M Shamsul Alam said that the BERC failed to serve the interest of consumers by increasing the power tariffs.
“Instead of curbing the skyrocketing expenditure and graft in the power sector, the government resorted to regular and whimsical increase of electricity tariffs,” he further said.
By checking graft, the government could save Tk12,000 crore, only from the gas sector, Tk10,000 crore from the power sector, and Tk1,000 crore from the coal sector, he said.
Continued hike on gas and power tariff will not only take a heavy toll on people but also on the country’s economy, he warned.
Farhan Nur, general secretary of Chittagong CNG Refuelling Station and Conversion Workshop Owners' Association, said the tariff hike will largely hamper their business.
“Electricity is used as a raw material for compressing gas at refuelling stations. So another hike in power tariff will push up the production cost. But at the same time, if the prices of CNG are not adjusted, we will incur losses,” he feared.
But, the BERC chairman, at the press conference, claimed that the hike will hardly impact consumers as the lifeline consumers will pay a monthly bill of Tk220-224 instead of previous bill of Tk215-219.
He said that a medium industry will pay a monthly bill of about Tk 354,000 against previous Tk 326,000 when new tariff comes into effect.
Parvin Akter, a Moghbazar resident, said every time the utility prices are increased, they have to suffer heavily as living costs soar accordingly.
“Being a landlord, it is always embarrassing for us to ask our tenants to pay increased house rent,” she said.
Subsidy in the power sector
According to BPDB, the country’s current total installed power generation capacity is nearly 23,000 megawatt (MW), including captive power and renewable energy.
During summer, the average peak load hovers between 12,000MW and 14,000MW.
But in the winter, the demand stays around 7,000-7,500MW, clearly depicting that a massive amount of the installed capacity remains unused during that season, from mid-November to early February.
Currently, the country has 137 power plants, with a number of them sitting idle. But the idle plants are paid a capacity payment.
Capacity payment is the amount of money that the government pays to the power plants that are sitting idle due to no electricity demand.
In FY 2018-19, over Tk8,000 crore out of BPDB’s Tk21,000 crore annual spending was for capacity payment.
BPDB General Manager (commercial operation) Md Kausar Ameer Ali earlier said they paid Tk15,000 crore to power plants for capacity payment in 2019, and the amount may shoot up to Tk20,000 crore in 2020.
In the last 12 fiscal years, the government subsidised Tk53,696 crore to the power sector.
In FY 2006-07, subsidies had amounted to Tk300 crore. But the amount went up over 26-fold to Tk7,970 crore as of the last fiscal year.
The sum of subsidies in the current fiscal year has been estimated at Tk9,000 crore — exactly 30-fold of what was paid in subsidies in FY 2006-07.