BERC will ask BPDB to improve efficiency, raise power tariff

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FE Report
The Bangladesh Energy Regulatory Commission (BERC) will ask state-owned Bangladesh Power Development Board (BPDB) Monday to improve its efficiency and raise power tariff on an average by 20 per cent for power distribution companies, officials said.
This will, however, not make any change to tariff rates for the retail consumers, including the households and industries.
The move by the BERC will be first of its kind in the country's energy sector where power tariff will be determined by an entity other than the energy ministry, a senior energy ministry official said.
The landmark step will be announced at a meeting on Monday.
The commission will ask the BPDB to improve its efficiency ensuring transparency and accountability in its activities, he said.
All the power sector stakeholders, including the BPDB, power distribution companies including Dhaka Power Distribution Company Ltd (DPDC), Dhaka Electric Supply Company Ltd (DESCO) the Rural Electrification Board (REB) have been asked to remain present during the announcement to be made at 11 am at the BERC office.
The BERC was established in March 2003 with the aim to streamline energy sector activities. It is going to announce the enhanced rates following a BPDB's proposal for electricity tariff hike by 41 per cent on an average for both bulk and retail consumers to offset the mounting losses of the state-owned power entities.
A public hearing was also held in August last where the BPDB tried to justify its tariff hike proposals before the power sector stakeholders.
On previous occasions, the energy ministry independently raised power tariffs. The ministry last increased the electricity tariff was on March 1, 2007 by 10 per cent for bulk consumers and 5.0 per cent for retail consumers.
But this time, the BERC is raising the tariff for the power distribution companies that purchases electricity from the BPDB.
"We have agreed to increase the power tariff for bulk consumers considering the increase in the cost of operation," the BERC chairman told the FE Saturday.
But the extent of the power tariff hike will not definitely be 41 per cent as demanded. "The demand is irrational," the commission top brass said.
To increase power tariff for the retail consumers the distribution companies will have to seek permission from the BERC, a senior commission official said.
In its proposal placed to the BERC in July last, the BPDB proposed the electricity tariff hike by 41 per cent from Tk 2.04 per kilowatt-hour (kWh) to Tk 2.87 per (kWh) for the bulk consumers and by 39.5 per cent from Tk 3.57 per kWh to Tk 4.98 per kWh for the retail consumers.
If it is not hiked, the accumulated losses of the state-owned power entities including the BPDB, newly created DPDC, DESCO, West Zone Power Distribution Company Ltd and the REB will reach Tk 23 billion in fiscal 2008-09 alone, the BPDB cautioned.
Currently, electricity supply cost of the DPDC, DESCO and WZPDCL, REB is Tk 2.849 per kWh, while their average tariff rates is Tk 2.110 per kWh, Tk 2.1609 per kWh, Tk 2.1609 per kWh and Tk 1.936 per kWh respectively.
The BPDB's supply cost is Tk 4.977 per kWh, while its average tariff rate is Tk 3.50 per kWh.