The government has decided to increase power tariff by an average of 7.0 per cent from March 01 next. This follows the last raise of power price by 5.0 per cent, as part of regular recalibration, also effected from March 01, 2023. At that time, it was done for the first time without the Bangladesh Energy Regulatory Commission (BERC) holding the usual public hearing which was done away with the necessary amendment to the law. The next month's adjustment too will follow suit, courtesy of an executive order rather than a public hearing. Details are not at hand, but if the reported exemption of households is there, it may look something like a palliative care administered to patients in worse conditions or at a terminal stage. When the system is not taken care of where it is at its most vulnerable, the passing of the burden on the general consumers is certainly not to their liking.
Law has been amended to give the executive order currency for adjustment of power price, preferably, upward. Why cannot a similar amendment be made to abrogate the pernicious agreements made with the captive power plants? Under the agreement, capacity charges have to be paid whether power is produced or not by any captive power plant once it has been commissioned. In 2023 alone, the government had to pay around Tk171.56 billion as capacity charge. Over the past 14 years, according to the state minister for power, energy and mineral resources, Tk 1.049 trillion was paid to 82 independent power producers and 32 rental power plants as capacity charges and rental payments. With the generation capacity increasing to 30,000 MW against a demand for approximately 17,000 MW, payment has to be made when power plants remain idle. Within a year or two, the power generation capacity will reach 40,000 MW and the government's obligatory but wasteful payment will increase even further.
Now that the large thermal power plants have been commissioned, there is no point sustaining the agreements with rental power plants which, moreover, have to be provided with subsidised fuel oils. The captive power plants have long outrun their utility. By this time they have received handsome returns on their investment. So reason dictates that the agreements are scrapped in the interest of the nation. Let the captive power plants operate on commercial basis with private clients such as factories and industries in the private sector. Some industrial units expressed their willingness to pay higher charges for electricity provided that the supply is uninterrupted.
Well, this equation may not be applicable to all industries, particularly those producing essentials for domestic consumers. The theory of economy of scale may backfire in this case because of the economic recession set not only in this country but also globally. There is the apprehension that the increase in power tariff for manufacturing and service sectors would trigger inflation which eased off slightly in December last before spiking in January at 9.86 per cent. To make the matter worse for the mass people, price of natural gas is likely to be raised further. Already reeling from the 12-year high inflation at an average of 9.02 per cent inflation, they are gasping for breath. Better it would be to set a reasonable ceiling with several tariff brakes for consumption of higher amounts of electricity. The more the consumption of power is the higher the tariff rate.
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