Illogical projects increase power costs, says experts

Emran Hossain | Published: 00:30, Dec 03,2019


Bangladesh Energy Regulatory Commission’s technical evaluation committee on Monday recommended increasing the distribution charges of the capital’s two power utilities by about 9 per cent at separate public hearings.

The committee made the recommendations after evaluating the proposals of Dhaka Power Distribution Company Ltd and the Dhaka Electric Supply Company Limited.

DPDC gave the proposal to increase its distribution charge by 49 per cent and DESCO by 47 per cent.

In support of their proposals to raise the distribution charge both the utilities said that they were investing heavily in power  development projects and that their  expenditures increased rapidly.

‘It needs careful consideration whether the people in this country can afford the government’s ambitious power development projects,’ Consumers Association of Bangladesh’s energy adviser Shamsul Alam said at a public hearing hosted by the BERC at the Trading Corporation of Bangladesh Bhaban.

He said that the DESCO was trying to shift its overhead distribution network underground without weighing whether or not the people had  the capacity to afford such ambitious plan.

Both the DPDC and the DESCO informed the public hearing that they were profit making concerns and also that they were expanding their business every year.

The two power utilities also informed the hearing that their system loss and other losses were decreasing.

The DPDC informed the public hearing that the value of it assets  increased to Tk 14,044 crore in 2019 from Tk 1,148 crore in 2009.

In that case, said Shamsul Alam, the DPDC  cannot justify increasing its distribution charge and the BERC should curb corruption and wastage by the utilities so that they had the development funds.

He said that often substandard electrical equipment were purchased without floating tenders and the burden was shifted on to the consumers’ shoulders.

For instance, he said, pre-paid metres were sold to consumers at prices much higher than their actual prices.

The DPDC informed the hearing that it needs money for six mega projects including shifting the distribution network underground and establishing 64 new sub stations under ‘smart grid system’.

‘There is no point in establishing smart grid system when the distribution utilities ‘cannot ensure uninterrupted power supply,’ said Shamsul Alam. 

Ganasamhati Andolan coordinator Zonayed Saki demanded to know what was the justification of taking projects without  verifying their merit.

‘Do we really need all these expensive projects?’ asked Saki.

He demanded of the government be open all its development projects to public scrutiny.

Communist Party of Bangladesh leader Ruhin Hossain Prince said that the power distribution companies ‘only want money having no concern about the people’s interest or their ability to pay.’

The DESCO proposed to increase its distribution charge though it earns Tk 0.10 a net profit per unit at the existing rates.

In 2019, DESCO supplied 56.04 crore units of  electricity to 9.52 lakh consumers in a 400 square km area in the capital.

In 2019, DPDC earned about Tk 140 crore  by selling 94.05 crore units of electricity to 13 lakh consumers.

According to BERC’s technical evaluation committee, in 2020, DPDC would need to spend Tk 84.56 crore  as the distribution cost, that is Tk 0.87 per unit.

The DPDC’s existing distribution charge of Tk 0.83 was fixed in 2017.

The DESCO would need to spend Tk 46.79 crore to meet its distribution cost, that is Tk 0.81 per unit in 2020, said the technical committee.

DESCO’s existing distribution charge of Tk 0.74 per unit was also fixed in 2017.

The public hearing began Thursday and BERC recommended increasing the bulk price of power by 20 per cent and the additional wheeling charge by seven per cent.

The BERC also recommended to increase the distribution charges of the country’s two other power distribution companies by up to 21 per cent.

Since 2010, electricity prices were increased eight times, the latest in 2017.

‘I would request the BERC to provide relief to the consumers,’ said Shamsul Alam.

‘Otherwise, the people would have no option but to leave the capital,’ he said.

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