The Bangladesh Energy Regulatory Commission (BERC) announced fresh hike in electricity tariffs, both in retail and bulk levels, on Thursday despite strong opposition from rights groups, political parties and trade-bodies.
The hiked tariffs will come into effect from March 1 (Sunday), and will continue until further notice.
The regulator raised the average electricity tariff by 5.3 per cent or Tk 0.36 to Tk 7.13 per unit (1 kilowatt-hour) from existing Tk 6.77 per unit.
The commission increased the bulk or wholesale level electricity tariff by 8.40 per cent or Tk 0.40 to Tk 5.17 per unit from existing Tk 4.77 per unit on an average.
"We have raised the electricity tariff considering tariff hike proposals of the state-run power entities, and costs of electricity generation, transmission and distribution in line with discussions in the public hearings," the newly-appointed BERC Chairman Abdul Jalil told the newsmen in a press conference, organised to declare the new hike.
The BERC also slapped a 5.0 per cent simple interest rate against unpaid bills at once for retailers instead of the existing 2.0 per cent compound interest rate.
Value added tax (VAT) will also be applicable on electricity bills of retail-level consumers.
Mr Jalil also said announcing the tariff hike is a legal obligation, responding to a query over whether it is a timely decision to raise electricity tariff at a time when global energy prices are sliding.
There is a provision of announcing verdict within 90 days of holding public hearings in this regard. The BERC has got four new commission members, including its chairman, who were not its members during the latest public hearings over tariff hike.
"We have asked the authorities concerned not to extend further high-cost oil-fired, rental and quick rental power plants to reduce electricity generation costs," the BERC chairman said.
Responding to a query over construction of 'too many' oil-fired power plants, keeping many of them idle due to lower demand, and paying them 'capacity charges,' he said the global standard is to keep one-third capacity of total power plants reserved, and operate the remaining two-thirds.
When asked why power plants of around half of the total capacity remain idle, Mr Jalil said the plants can be utilised in future, when the demand will go up.
Under the new retail-level tariff structure, the residential consumers using 0-50 units will pay Tk 3.75 per unit from March 2020 instead of the previous Tk 3.50, while consumers of up to 75 units will pay Tk 4.19 per unit instead of Tk 4.0, consumers of 76-200 units Tk 5.72 per unit instead of Tk 5.45, users of 201-300 units Tk 6.00 per unit instead of Tk 5.70, users of 301-400 units Tk 6.34 per unit instead of Tk 6.02, 401-600 unit users Tk 9.94 per unit instead of Tk 9.30, and users of above 600 units will pay Tk 11.46 per unit instead of Tk 10.70 per unit.
The BERC also raised the electricity transmission charge by 5.30 per cent to Tk 0.2934 per unit, considering a proposal of the state-run Power Grid Company of Bangladesh Ltd (PGCB).
The energy regulator last raised retail electricity tariff in November 2017, which became effective from December 2017. The bulk electricity tariff was last raised in August 2015.
Earlier, the commission raised average retail-level electricity by 69.25 per cent in eight phases, between March 2010 and September 2015, citing factors like higher prices of imported oils and growing dependence on those to generate electricity.
The BERC also spiked the bulk price of electricity by 106.75 per cent in seven phases, between March 2011 and September 2015, on the ground of higher electricity buying costs from producers.
Meanwhile, businesses and rights groups have expressed their frustration over the power tariff hike, saying it will create extra burden on costs of living and doing business, thus affecting trade and economy at large.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in a statement, said, "Since our costs have gone up by almost 29.40 per cent during the last four years, and simultaneously prices have steadily gone down, we can't afford any increase of any sort."
"This power tariff hike will not be beneficial for the industry," it noted.
In a press statement, the Bangladesh Textile Mills Association (BTMA) said small and medium factories will be severely hit due to the fresh power price hike.
It is not rational to raise power price without paying attention to ensuring quality power supply and improved transmission system, the BTMA added.
The trade-body also demanded review of the decision regarding power price increase.
The Consumers Association of Bangladesh (CAB) opined that the rise in power tariffs is 'not rational'.
Talking to FE, the CAB Chairman Golam Rahman said the tariff hike will certainly put extra pressure on people of all classes and will also affect the country's business competitiveness in global market.
Also citing the BERC chairman's comment on putting an end to rental power plants in future, he said, "Such observation proves that allowing rental power plants was not a right decision."
"We gave our opinions and arguments during the public hearings, and hoped that all these will be reflected in the tariff arrangement," he added.
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