Fresh round of energy price hike on the cards

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M Azizur Rahman
A fresh round of energy price hike is on the cards in the new-year as the authorities planned to raise rates of a raft of fuel products in an effort to stem mounting losses
of state-owned power and oil corporations, officials said Saturday.
Bangladesh Power Development Board (BPDB) will have to purchase coal at higher rate at US$110 per tonne from today (Sunday) as the government hiked the price by $26 a tonne, a senior energy ministry official said.
Price of compressed natural gas (CNG), used by most of the country's industrial plants, private cars and buses, is expected to go up this month to keep its tariff nearer to the newly-hiked prices of petroleum products, he said.
Retail power tariffs will soar further by up to 7.76 per cent from February 1, 2012 --- on top of the 15.02 per cent raised in December last year --- in line with a decision of the Bangladesh Energy Regulatory Commission (BERC).
Officials said fuel consumption will increase by around 1.4 million tonnes as cash-strapped Bangladesh Petroleum Corporation (BPC) plans to import 6.50 million tonnes of petroleum products in 2012, up from around 5.10 million tonnes in 2011, to meet growing demand
Surging oil prices in international market could escalate anytime as the war drum beats in the Persian Gulf, piling up more woes for the BPC, provided it fails to match the prices at the retail level to cut back its losses.
"If the war rhetorics between Iran and the US cool down, we may escape from a fresh rise of crude prices in the international market. But, any sign of global economic upswing will spike prices," said an official.
If the depreciation of local currency - Taka - against the US Greenback continues, BPC's losses will jump further, requiring the state-owned import and marketing monopoly to hike petroleum prices further, he added.
The government will also need more energy products like furnace oil, coal and natural gas to generate electricity from dozens of newly-built small power plants, set up as part of the government's drive to scale back shortages.
According to the government's master plan, the power ministry would target adding 1,986 megawatts (mw) new electricity - 632 mw by public sector and 1,354 mw by private sector - by setting up about a dozen new power plants in 2012.
Energy consumption in factories and commercial houses will also increase significantly in 2012 to feed growing demand as the government targets a seven percent growth in gross domestic product (GDP) in line with its medium term economic target.
The country has attained an average 6.0 per cent growth annually since 2003 on back of booming industry, services and farm sectors. Experts said one per cent economic growth normally leads to two per cent rise in fuel consumption.