Bangladesh Energy Regulatory Commission has asked the government to provide fund to the state-run Power Development Board in grants to offset deficit it incurs mainly due to power purchase from rental plants at high cost and selling at lower rates to the distribution utilities.
The BERC order published on Sunday will ultimately result in writing off more than Tk 44,000 crore the government had lent to PDB in last 11 years with a three per cent interest until June 2017, said commission officials.
Besides, PDB will get Tk 3,600 crore in next one year as the commission has asked the government to provide the fund in grant at the rate of Tk 0.60 per unit or kilowatt-hour as the board needed to spend Tk 5.44 per unit against its average sales price at Tk 4.84 per unit.
On November 23, the energy commission raised the retail prices of electricity by 5.3 per cent or Tk 0.35 per unit on an average with effect from December 1, keeping the average price of bulk electricity unchanged at Tk 4.84 per unit against its cost of Tk 5.44 per unit.
In its order, the energy commission also asked the power board to place demand note to the government to obtain the fund in grant.
Power division secretary Ahmad Kaikaus on Tuesday told New Age that they would seek the fund in grant from the finance ministry in due course.
When asked about the previous losses amounting Tk 39,610 crore and its interests of around Tk 4,500 crore, an energy commission official said that the power board with its ministry, the power division, would settle the matter with the finance ministry.
‘The commission never recognised the government’s exercise of giving funds in loan to the power board instead of grants,’ he said, adding that the commission always asked the government to give the fund as subsidy.
When asked about the difference between the latest order and the previous orders, the commission official said, ‘This time we specified the power board’s fund requirement in power tariff which was not specified in the previous orders.’
The energy commission estimated that the country’s net electricity generation would be 6,102 crore units at the power plants installed in public and private sectors as well as those to be imported from India in next one year, according to the order.
The power board would require Tk 32,318 crore until December 2018 for power generation at its own plants and power purchase from public and private sector companies as well as from India with an average cost of Tk 5.44 per unit.
The power board would earn Tk 3,600 crore less than its revenue requirements which would be provided by the government in grant, the order said.
Consumers Association of Bangladesh energy adviser M Shamsul Alam said that the government had been burdening people in two phases, one by forcing the power board to buy electricity from the expensive sources like rental plants that raised power supply cost and second by lending money to the board instead of providing it as grant to offset losses.
On top of the subsidy requirement, the average retail price of electricity has so far been raised by 81.91 per cent, up from Tk 3.76 per kilowatt-hour or unit to Tk 6.84, in nine phases since March 2010 due to the government’s policy to serve vested quarters, he added.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Business