IMF team attends BERC presentation on setting power, gas tariffs

A four-member IMF delegation has been in Bangladesh since October 26 to discuss the government's request for a $4.5 billion loan

The visiting team of the International Monetary Fund (IMF) has been keen to know how the Bangladesh Energy Regulatory Commission (BERC) sets power and gas tariffs.

A four-member IMF delegation, led by Rahul Anand, head of its Asia and Pacific Division, has been in Bangladesh since October 26 to discuss the government's request for a $4.5 billion loan and held a series of meetings with its different departments.

BERC Chairman Abdul Jalil welcomed the delegation in Kawran Bazar on Sunday. He briefed them about the operations of the energy regulator.

Jalil said the IMF team mainly wanted to know how the regulatory body fixes the tariffs on gas and electricity. "We've informed the IMF team about the legal process that the BERC follows as per the BERC Act while setting the tariffs of gas and electricity."

BERC Deputy Director (Tariff) Quamruzzaman made a presentation on the way they set power and gas tariffs during the meeting.

Sources at BERC said the IMF team mainly focused on the government's subsidies to the gas and power sector.

They asked different questions on the process of the government's subsidies now being provided to the power and gas sector.

They wanted to learn whether the subsidy is fixed by the government or BERC, said a source, adding that BERC made it clear that they have no scope to fix the subsidy. "Only the government sets the subsidy and allocates funds based on the requirements of the power and energy ministry.'"

The IMF team was informed that the price of petroleum fuel is set by the government. It is supposed to be set by the energy regulator as per the BERC Act.

Recently the BERC turned down an appeal of the Bangladesh Power Development Board (BPDB) to raise the bulk power tariff to cover the financial losses of the government in providing electricity to the consumers.

BPDB said the government will have to spend Tk71,878 crore in the fiscal year 2021-22 on power production, of which Tk44,434 crore will be spent on buying electricity from the private sector.

Of this amount, Tk37,963 crore will be required to buy power from the independent power producers (IPPs) and small IPP plants in the private sector which produce 38 percent (8,807 MW) of the total generation capacity.

BERC held a public hearing on the issue in May this year and finally rejected BPDB's request on October 13.