Yet another hike in power tariff is reportedly in the offing. Separate proposals for rate hike, in varying degrees, from the state-owned power distribution entities have already reached the Bangladesh Energy Regulatory Commission (BERC) through the ministry of power and energy. The power and energy sector regulator is due to start a three-day public hearing on the tariff-hike proposals from today (Tuesday). The Prime Minister, too, asked the power subscribers the other day to be ready to pay, at least, the cost of power production, which is obviously higher than what the latter are paying now as tariff.
Even if the proposed hike in power tariff is put into effect, those would be less than the average rate of procurement and the government would continue to require providing a substantial amount of subsidy. What is however the important issue here is: Could the government avoid burdening the power subscribers with another hike in power tariff? The prevailing power generation scenario does not offer any hope for reduced tariff. But had the government stuck to its promised plan to decommission the expensive liquid fuel-based rental power plants on schedule and implement projects of large power plants both in private and public sectors in time, another tariff hike could have been avoided.
Power subscribers, as of now, are happy with the power situation. For the past few months, there was load-shedding to the minimum extent, largely due to the seasonal factors about demand. However, the subscribers would get to know the actual situation with power in the coming summer season, starting from April. The improvement in power situation would not have been possible without the rental and quick-rental power plants in the initial years of the immediate past government. But the government had promised to stop operation of rental plants which were allowed to operate under a stop-gap arrangement. But none of such plants has ceased to operate at the end of their respective contract periods. Rather the contract periods of such plants are being extended.
Regrettably, none of the medium- and long-term base-load plants is likely to be completed even within their extended schedule. Had the government replaced the rental plants with the base-load plants, it could have saved a lot of public money and provided price-relief to power subscribers. Allegations have it that some private sector sponsors of the base-load power plants also have interest in rental power plants that have been fetching them handsome return. So, they have been allegedly delaying implementation of the base-load plant projects.
The rental power plants have been centres of controversy since their launching. These plants, undeniably, have provided a much-sought-after relief from severe power crisis, though at a substantial cost. But the pricey solution apart, allegations about theft of fuel, fake billing, capacity payment by an evil nexus of rental plant operators and a section of government officials have been rampant. Yet the relevant ministry or regulatory institution or anti-graft watchdog has not come out in public with results of probe into any of such allegations.
Moreover, many might consider any further hike in power tariff unjustified particularly when the international oil price has been on the decline since 2013. The price of per-barrel Brent crude oil dropped by $3.0 in that year. Market pundits predict the price to come down by another $4.0 a barrel in 2014 and 2015. However, if the government is determined to make an upward revision of tariff to narrow the existing gap between the cost of procurement of per unit of power and the average tariff of the same, it should elaborately explain to the subscribers the reasons and justify the hike.
