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Bangladesh hikes retail power prices again

10th increase in 11 years, poor, middle class see greater increase

Staff Correspondent | Published: 17:31, Feb 27,2020 | Updated: 00:33, Feb 28,2020

 
 

The Bangladesh Energy Regulatory Commission on Thursday increased the average retail price of electricity by 5.3 per cent with effect from Sunday.

With the latest hike the retail electricity price has increased by 98 per cent since 2009, when the incumbent AL-led government assumed power.

Energy and consumer rights experts said that the government raised the power price 10 times in last 11 years thanks to a flawed power and energy policy.

In December, following a public hearing, Consumers Association of Bangladesh had demanded that the power price be reduced to spare the consumers the burden resulting from the government’s wrong decision.

‘The power price has been increased as its production and transmission became costlier,’ BERC chairman Abdul Jalil said while announcing the increase that would take effect from March 1.

The average retail price of each unit of power would now become Tk 7.13 from Tk 6.77 with the order to increase the power tariff coming into effect, he said at a press conference at the BERC headquarters in the capital.

In 2009, the retail price of each unit of power was Tk3.60.

Poor people’s monthly power expenditure would jump by up to 8.7 per cent as the life line consumers’ monthly electricity bill would increase by maximum Tk17.50 on average as a result of the latest increase in the price, a BERC estimate shows.

Life line consumers are the poorest segment of the people not being able to consume more than 50 units of electricity a month. They live mostly in rural areas and in slums in the city.

Lower middle class consumers spending an average of Tk759 on power would need to pay Tk803 with the implementation of the new power tariff, a 5.9 per cent increase, shows the BERC estimate.

The monthly power expenditure of the middle class people would go up by Tk114 with the average monthly power expenditure of a middle class family rising to Tk2,066 from Tk1,952, a 5.8 per cent rise, according to the BERC.

For irrigation, the average monthly power expenditure would rise by Tk188, a 5.8 per cent increase in the price compared to the previous tariff structure, the BERC estimate shows.

Small industries’ average monthly power expense would increase by 4.9 per cent while 5.3 per cent for medium industries and 5.4 per cent for large industries, the BERC estimate said. 

BERC chairman Abdul Jalil said that the power production and transmission costs went up following increases in capacity charge, VAT on coal exports, depreciation, and oil and gas prices.

He said that the increased tariff was aimed at making up for Tk3,600 crore to be incurred as deficit by the Power Development Board in 2020.

The PDB in its proposal to increase the power price had projected the deficit in 2020 to reach Tk8,000 crore.

CAB president Ghulam Rahman said that the reasons cited for the need to increase power price were not acceptable at all.

‘The decision to raise the power price is neither just nor reasonable,’ he observed.

He viewed that the price hike would not have been needed had the power sector not wasted its resources and checked corruption.

In December, CAB estimated that inefficiencies and corruption increased the power sector’s annual spending by Tk10,549 crore.

The PDB had informed the public hearing, hosted by the BERC, in December of paying Tk59,000 crore in capacity charge to the idle power plants over the last decade.

During the hearing the BERC repeated the instruction for the phasing out of seven old power plants for their power production costs were far higher than the ones established recently.

Many such retirement-age expensive power plants still remain in operation despite the demand being low compared to the country’s installed generation capacity with new power plants sitting idle.

Currently Bangladesh’s installed capacity is over 20,000 MW with the highest amount supplied reaching 12,900 MW during summer. In winter the electricity demand falls as low as 6,000 MW.

Many of the expensive private rental power plants, established with the view to operating for a stipulated time period to deal with the power crisis, continued to operate even

after a decade.

Communist Party of Bangladesh secretary Ruhin Hossain Prince termed the decision to increase the power price an injustice to the country’s people.

‘The decision to raise the power price represents the government’s willingness to allow corruption in the power sector,’ he said.

Prince was among a handful of people who participated in the public hearing held in late November and early December on the government company’s proposals to increase the power tariff.

‘The BERC does not look like acting independently for it apparently did not take into consideration what was discussed in the hearing, he said. 

The PDB in its proposal had called for increasing the bulk power price by 20 per cent while the Power Grid Company of Bangladesh had asked for a seven per cent rise in the wheeling charge.

But the BERC has increased the bulk price by 8.4 per cent and the wheeling charge by 5.3 per cent.

CAB chief Ghulam Rahman feared that the power price hike would increase an already high living cost and the fixed income group people would be economically hard pressed.

The Left Democratic Alliance and the CPB in separate statements demanded cancellation of the price hike and urged people to stage protests against the government.

Industries and businesses were also worried about the price hike that they asserted would leave a negative impact on them.

‘The power price hike would increase the overall production cost causing Bangladesh to lose competitiveness at the global level,’ said Ghulam Rahman.

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