Bangladesh energy regulator raises retail power prices by 5.3%

The Bangladesh Energy Regulatory Commission or BERC has hiked retail electricity prices by Tk 0.36 or 5.3 percent to Tk 7.13 per unit, making the new rate effective from March.

The BERC announced the decision from a media briefing in Dhaka on Thursday after holding a public hearing on a proposed increase in bulk electricity tariff.

The BERC hiked the wholesale prices of power by 8.4 percent to Tk 5.17 per unit. The cost of power transmission or wheeling charge has also been increased by 5.3 percent to Tk 0.29 per unit.

The government previously raised retail power prices by Tk 0.35 or 5.3 percent per unit in November 2017.

As a result, household prices of up to 75 units of electricity went up by Tk 15, 150 units by Tk 48, 250 units by Tk 90, 450 units by Tk 196, and the cost of 1,000 units increased by Tk 604.

Within two months of a hike in gas prices at the end of June last year, power distribution agencies began calling for the bulk power tariff to be raised. A public hearing on the proposals was subsequently held on Nov 28 last year.

At the hearing, the Bangladesh Power Development Board proposed increasing bulk electricity tariff by 23.27 percent per unit to trim its losses.

Dhaka Power Distribution Company, West Zone Power Distribution Company Ltd, and Northern Electricity Supply Company also submitted proposals to increase retail prices, citing a rise in spending on three areas - operation and manpower, introduction of modern technology and equipment price hike.

Only Bangladesh Rural Electrification Board or BREB said it would not need the hike if bulk power tariff did not increase.

After reviewing proposals of the power companies and public opinions made at the hearing, BERC Chairman Md Abdul Jalil announced the new rates within 90 days of the public hearing as per the rule.

Jalil cited 5 percent value added tax, Tk 0.10 demand charge on every cubic metre of gas, interests payable on projects funded by export credit agencies, and rise in depreciation expense and capacity charge as the factors that drive the power prices.

He said the commission did not consider gas price hike in increasing power prices though the government had on several occasions said the prices would go down once it started importing liquefied natural gas or LNG.

The BERC chairman said 85 percent of the power it supplies goes to the rural electrification associations.

Customers who have been paying Tk 215 to Tk 219 monthly under the associations will have to pay Tk 220 to Tk 224 from March, according to him.

Those who pay Tk 3,260 monthly to power irrigation pumps will be shelling out an additional Tk 188, he said.

For a small industry unit which has been paying Tk 16,550 monthly, the bill be Tk 17,360 after the hike.

‘UNREASONABLE’

Professor M Shamsul Alam, an energy advisor to rights group, the Consumers Association of Bangladesh or CAB, has called the power price hike “unreasonable”.

The BERC claimed it hiked the price only after a thorough analysis of the economy, growth, macroeconomic indicators, and small and medium entrepreneurs’ interests.

Shamsul said the association wanted the prices reset in proportion to the electricity the consumers get at industrial, commercial and household levels.

“But the prices have been fixed in continuation of the old practice. The price hike order does not reflect sound judgement at any levels,” he said.   

Shamsul said they had made recommendations to resolve the issue - rise of cost – behind the price hike at the hearing.

“There would have been no reason for power price hike if illogical expenses of over Tk 90 billion were adjusted,” he said.

File Photo: Demonstrators protest outside the TCB auditorium in Dhaka during the public hearing conducted by the BERC on a power price hike proposal.

The BPDB had proposed to the energy regulator to increase bulk electricity tariff by 23.27 percent per unit to trim its losses, which stood over Tk 68.62 billion in the last fiscal year.

It is projected to be about Tk 86 billion this year taking the rising transmission costs, including 41 percent for gas price hike, into account.

Shamsul said the government had earlier provided its power transmission companies with subsidies to make up for the losses which ultimately made the deficit look logical.

BNP Secretary General Mirza Fakhrul Islam Alamgir in a statement said the power price hike is an “extended show of the plundering by the government”.

The Left Democratic Alliance said the government created “a sanctuary for plunderers” by introducing rental and quick rental power plants.

“Why will the people have to pay for the lootings?” it asked.