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Govt raises bulk, retail tariffs of power again

Another pinch of hiked gas tariffs also effective in sync


M AZIZUR RAHMAN | February 01, 2023 12:00:00


In a move to pass on the rising energy costs to consumers, critics say, the government raised both retail and bulk electricity tariffs across the board with effect from today.

In sync with the hiked power rates the already-announced raise in natural-gas tariffs will also come into effect today (Wednesday), independent economists say in a double count of extra expenses to be borne by consumers already hit by general price rises amid a global crunch.

The Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) issued Tuesday the order of power-tariff hike for all consumers through a gazette notification, which experts say would have domino effect.

The government raised retail electricity tariffs by up to 5.07 per cent while the bulk electricity tariffs increased up to 7.36 per cent.

The MPEMR through a previous gazette notification on January 12 had raised the retail electricity tariffs by around 5.0 per cent with retrospective effect from January 1, 2023.

Tariff hike in two months in a row means its retailing rate goes up by over 10.40 per cent within a short span of two months.

The most vulnerable consumer group, dubbed lifeline consumers who use 0-50 units of electricity per month, will have to count Tk 4.14 per unit (one kilowatt-hour) from February 1, 2023 instead of Tk 3.75 per unit they paid before January 1, 2023.

Through a recent amendment to the Bangladesh Energy Regulatory Commission (BERC) the government vested in itself the authority to adjust energy prices, as and when necessary, bypassing the commission and public-hearing procedure.

The BERC previously had hiked natural gas and electricity tariffs after holding public hearings.

The BERC in its latest order had hiked the bulk-power tariffs by 19.92 per cent in November 2022, which came into effect from December.

Under the latest hike, the household consumers who use electricity within the range of 0-75 units will have to count Tk 4.62 per unit instead of Tk 4.19 which they paid before January.

The households who use electricity within the range of 76-200 units will have to count Tk 6.31 per unit instead of Tk 5.72.

Those who use 201-300 units will have to pay Tk 6.62 per unit now in a rise from Tk 6.0.

Consumers who use electricity within the range of 301-400 units will have to count Tk 6.99 per unit instead of Tk 6.34.

Households who use 401-600 units will have to pay higher at Tk 10.96 per unit from Tk 9.94.

Those who use above 600 units will have to count Tk 12.63 per unit instead of Tk 11.46.

Pump users for irrigation of cropland will have to count Tk 4.59 per unit instead of Tk 4.16.

Small-industry owners will have to pay Tk 9.41 per unit, Tk 8.46 per unit and Tk 12.29 a unit for their consumption of electricity as flat rate, off-peak rate and peak rate in rises from Tk 8.53, Tk 7.68 and Tk 10.24 respectively.

Following the hike in bulk-electricity tariffs the state-run power-distribution companies who supply electricity to commoners will have to purchase electricity from BPDB and REB at 6.57-percent to 7.36-percent higher rates to purchase 230 kilovolt (kv), 132kv and 30kv electricity.

Natural gas consumers across the country will also have to count additional costs by up to 178.88 per cent from today (Wednesday) as the MPEMR through its previous executive order on January 18 had hiked the tariffs with effect from February 1.

Government power plants, independent power plants (IPPs) and rental power plants owned by private firm will have to count Tk 14 per cubic meter from previous rate of Tk 5.02--which comes to a 178.88-percent rise.

Small and cottage industries will have to bear the second- maximum hike to Tk 30 per cubic meter from previous Tk 10.78, which accounts for a rise of 178.29 per cent.

Captive power plants, small power plants and merchant power plants will have to pay 87.50-percent higher at Tk 30 per cubic meter from previous Tk 16 per cubic meter.

Big industries are to pay bigger gas bills by 150.41 per cent to Tk 30 per cubic meter from previous Tk 11.98 per cubic meter.

Medium-category industries will have to pay 154.66-percent higher tariffs at Tk 30 per cubic meter from previous amount of Tk 11.78.

Commercial consumers, including hotels, restaurants and similar business outlets, have to count higher bill rates by 12.80 per cent to Tk 30.50 per cubic meter from previous Tk 26.64.

Experts and rights groups have termed the hiked 'illogical' and 'non-transparent' and threat to the country's future energy security.

"This is an outcome of long-lasting corruption and lack of accountability in power and energy sector," says energy adviser of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam in a scathing criticism of the hike in prices of fuels with their suggestion for tidying the sector left unaddressed.

Consumer rights have been ignored with the hikes, he alleged while expressing his instant reaction to the FE after Tuesday's government announcement.

Small-and cottage-industry consumers including in irrigation and fisheries sectors will bear the brunt as they will have to count additional expenses unlike the previous occasions, he pointed out.

Small and cottage industries, irrigation, fisheries were kept outside the purview of tariff hikes to ensure their growth, he added.

"The special law under which the government attained the authority to award contracts in power and energy sector, bypassing the competitive tendering process, is the main culprit for the mess," says the CAB leader.

Former director-general of Power Cell BD Rahmatullah also echoed such views while talking to this correspondent Tuesday.

"This is a freestyle hiking of power and energy prices without maintaining any transparency and accountability," he said.

"Nowhere in the world the government raises energy and power prices in such a way," he said.

"The government is raising power and energy prices in the name of 'adjustment', which is unacceptable," he said.

This is part of fulfilling the conditions set by the International Monetary Fund (IMF) without considering the economic condition of the countrymen, the former Power Cell DG alleged.

Both of them termed the hike 'too much' and said it would reduce competitiveness of the country's growing industrial sector.

It will push up inflation and raise prices of all essentials, worsening the already-strained fiscal condition of commoners, they concluded.

Some economists, in media reaction on the day, also said the IMF during a latest credit negotiation recommended price adjustments to reduce state subsidies. Other reforms were also advised, they said but couldn't say for sure immediately what packages of reforms could come.

The energy-price rise, incidentally, comes the very day when the Washing-based Fund approved for Bangladesh a US$4.7 billion worth of loan the country sought for reserve replenishing and budget support.

Chairman and Founder of Policy Exchange Bangladesh Dr M Masrur Reaz feels that the fresh power-price hike, a second consecutive one within last 30 days, will surely exacerbate the burden on cost of living and cost of business already grappling with high inflation and the impending gas-price rise.

"While the gas-price hike spared consumers and transport CNGs, the power-price increase targets both," the economist said.

He observed that the government should have considered a zero or low increase for consumers and could have considered the increase at a later stage in order for the people and business to cope with the effects of gas-price increase.

He thinks the increase in power rates could have been avoided had the inefficiencies including leakages through excessive and/or unnecessary payments to power producers in form capacity charges been addressed.

He, however, said in order to avoid further increase in short term, it would be important for government to review the power contracts and the payments terms, and significantly rationalize.

President of the Consumers Association of Bangladesh (CAB) Ghulam Rahman said the latest tariff hike of power would certainly put extra pressure on the consumers, especially those whose income has not increased much.

He noted that the government recently approached the IMF (International Monetary Fund) for its US$ 4.5 billion worth of financing support as the economy is in difficulties because of the ongoing volatility in the global supply chain. To meet conditions of the global lender, he said, the government brought necessary changes to the BERC Ordinance and made the hike.

"We think the process of raising tariff is not transparent and it could further raise the possibility of corruption and irregularities," he said.

Undoubtedly, according to him, the consumers will bear the burden of the government's too much spending on idle power stations.

Azizjst@yahoo.com


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