Govt plans to hike power tariff to offset losses from high-cost plants

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FE Report
The government plans to raise electricity tariff in the next few months as it seeks to pass the financial burden of quick-fixing the country's nagging power crisis on to the consumers.
Prime Minister's energy advisor Dr. Taqfiq-e-Elahi Chowdhury said the authorities would propose a tariff hike as part of efforts to offset losses it would incur by buying power at a high-cost from dozens of diesel and furnace oil run power plants.
"Power Development Board (PDB) will put forward proposal for tariff hike to the energy regulator in a month or two," Dr Tawfiq told a press briefing..
The Bangladesh Energy Regulatory Commission (BERC) would decide on the tariff hike after examining the grounds behind the proposal, he told newsmen at the secretariat.
The commission hiked electricity tariff by up to seven per cent in March this year and a new hike in a space of a few months could fuel public anger.
PDB chairman ASM Alamgir Kabir said the average bulk power supply cost might double to over Tk 5.0 per unit (1 kilowatt-hour) by 2013 from the present Tk 2.80 per unit with the commissioning of new oil-fired power plants.
The PDB incurs Tk0.35 loss for every unit of power it sells to consumer, with the government subsidising the entire financial burden.
The PDB's average supply cost would soar to over Tk 4.0 per unit by 2010, Tk 4.92 by 2011-12 and Tk 5.0 by 2013 with the start of electricity generation from the high cost fuel-run plants, he said.
He said average power supply cost would fall again to Tk 4.5 per unit after 2013 when several gas and coal-fired power plants would start supply and some high-cost oil-fired power plants would expire.
During the briefing, the PDB chairman unveiled a road-map to fix the country's nagging power crisis, saying the government has planned to generate around 9,426 megawatts (mw) of electricity by 2015.
Under the plan an additional 792 mw would be added in 2010, 920 mw in 2011, 2269 mw in 2012, 1675 mw in 2013, 1170 mw in 2014 and 2600 mw in 2015, Kabir said.
Several 'fast-track' rental power plants are already being set up and expected to generate electricity by 2010, he said adding: "We are confident we'll have some surplus electricity in 2012."
"There might have some slippages from the target," said Dr Tawfiq, adding presently the country's average electricity generation hovers around 3800mw.
Power officials also deflected criticisms that the government was illegally bypassing the country's procurement laws in signing costly rental power generation agreement with foreign and local firms.
"We avoided inviting tenders to set up these plants in a bid to generate more power as quickly as possible," Power Secretary Md Abul, Kalam Azad said
"And we have done it in line with the country's procurement laws. The tendering process has been avoided as per article 68 of Public Procurement Act (PPA)," he said.
"It (the article) spells out ways to select companies through negotiations in case of emergency," he added.
Dr Tawfiq said: "The whole process is being done maintaining transparency and in line with the legal framework."
Bangladesh Petroleum Corporation will import additional fuel and scale up storage capacity as the demand for diesel and furnace oil would pick up considerably later this year as soon as the new plants start operation, said its chairman Anwarul Karim.
At present, the country has a storage capacity of 272,000 tonnes of petroleum, he said, adding the BPC would set up new storage capacity for 190,000 tonnes of diesel and 46,000 tonnes of furnace oil.
The corporation has drawn out a plan to increase its storage capacity by another 200,000 tonnes within the next two years, he added.
State Minister for Power and Energy Mohammad Enamul Haque and top officials of state-owned power entities also attended the press conference.