Bangladesh hikes bulk power prices by 19.92% amid energy crunch

The Bangladesh Energy Regulatory Commission has hiked bulk power prices by 19.92 percent amid an ongoing energy crisis.

The prevailing wholesale price was raised from Tk 5.17 per unit to Tk 6.20 in an effort to cut back on the Tk 170 billion in subsidies to the sector, BERC Chairman Abdul Jalil said at a press conference on Monday.

The change in the power tariff will have no impact on the retail prices faced by consumers for the time being. Jalil said a new public hearing would be required for any hike in retail prices.

On Oct 13, the BERC had kept bulk power prices stable in a surprise move despite a proposal from the Power Development Board to raise prices.

Jalil had cited 'ambiguity in the data' as the justification for keeping the tariff rate steady at the time.

In February 2020, the bulk price of power was set at Tk 5.17 per unit. At the start of 2022, the Bangladesh Power Development Board submitted a proposal to raise the price to Tk 8.58 per unit in an effort to compensate for a Tk 300 billion shortfall in its coffers and to cut subsidies.

The proposal was revised due to some deficiencies and lack of information in the PDB’s initial bid. A public hearing was held on the second proposal on May 18 and it was fiercely opposed by associations of consumers and businesses.

The BERC had given until May 31 to analyse the various issues that were raised at that hearing and for the gathering of information and written opinions. On Oct 13, 90 working days after the hearing, the regulator rejected the price hike proposal, stating that the situation was still unclear.

For the BERC to take action it needs data, analysis and a decision, Jalil had said.

"Proper data is needed for proper analysis and there were some ambiguities in the data.”

If a decision is taken amid a lack of clarity, its impact could be horrific, he added.

Mohammad Bazlur Rahman, a BERC official, said that the government is providing Tk 170 billion in subsidies to cover part of the Tk 300 billion deficit. Even with the remaining Tk 130 billion shortfall, the situation is now somewhat better than it was, he added.

The government reintroduced rolling blackouts in July following a gas shortage fuelled by the Russia-Ukraine war. It also raised gas and fuel oil prices to save the depleted foreign currency reserves. The power crisis hit a nadir after widespread power grid failure, but has improved in winter as less energy was consumed for cooling.

Jalil said the IMF discussed the energy price issue with the commission but raised no further questions after explanations. “The hike decision is not based on any IMF prescription,” he said, responding to a question from a reporter.