Power subscribers worried over tariff hike

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Nizam Ahmed Traders and the members of the general public are extremely worried over the decision by the authorities concerned to hike the tariff for electricity at the consumer level within a week or two, community leaders said Friday. All categories of electricity consumers are bracing themselves for the hike of power tariff following the increase of tariff by 33.57 per cent last Thursday by the Bangladesh Energy Regulatory Commission (BERC) for the bulk buyers, who distribute electricity to all categories of consumers. "The tariff hike will help the authorities concerned to cut the annual amount of subsidy bill on account of power supplies below cost by about Tk 129 billion," an official of the Bangladesh Power Development Board (BPDB) told the FE. The existing amount of subsidy for electricity is Tk 179 billion, he added. To be effective in two phases, the first hike by 16.79 per cent (or Tk 0.47 per unit) will come into effect on December 1 while the next increase by 14.37 per cent (or Tk 0.47 per unit) on February 1 next year. The current bulk price of a unit of electricity is Tk 2.80. "The prices at the consumer level will also be raised in phases to match the increased tariff as fixed by the BERC," an official of the Dhaka Electric Supply Company (DESCO), one of the leading bulk buyers of electricity from the BPDB told the FE. The planned hike of electricity tariff at the consumer level is likely to fuel inflationary pressure further, destabilising the commodity market and encouraging opposition political parties to intensify an ongoing campaign to compel the government for early elections, economic and political observers said. An enhanced power price, when implemented, will again push up the rate of inflation which came down slightly in October this year to 11.42 per cent from 11.97 per cent in the previous month, experts noted. "We would have no objection if the energy price-hike could ensure uninterrupted power supply to all production units and attract foreign direct investment, which could help bring economic prosperity in other ways," Hossain Zillur Rahman, adviser to the past caretaker government told the FE. Such a hike was a short-term solution of slashing the subsidy bill by the government which was yet to give a clear picture about the energy scenario to the country's entrepreneurs, investors and the common man, Zillur Rahman said. "We don't see any plan. People don't know what the authorities concerned are going to do in the long run," Zillur Rahman, also a noted economist of the country said. The enhancement of electricity price at the consumer level will have a chain-effect on the commodity markets because power supply is critical for many things in the economy. Electricity is used by all from the rich to the poor in both rural and urban areas. It has wider use than petroleum products or compressed natural gas, another observer said. It will also provide another fodder to the opposition discrediting the government for its "failure" to stabilise commodity prices, a leader of the ruling Awami League said requesting for anonymity. Meanwhile, cross-sections of people have already expressed their deep worries and annoyance at the frequent hike of essentials. Just less than two weeks ago, the authorities raised the prices of five petroleum products -- octane, diesel, petrol, kerosene and furnace oil -- by Tk 5.0 per litre. Most of the newspaper readers who posted their comments on some relevant online editions following the hike of bulk power price, criticised the government and the ministry of power, energy, mineral resources for hiking fuel and electricity prices frequently. They said the relevant authorities must evolve means to produce power at a lower cost or bear the load of subsidy if they want to stay in office. However, lamenting on the plight of the fixed income group of people who fail to meet the increasing cost of living, a commenter said: "Under this government, people may also have to pay for the breathing." Most of them warned the government to be ready to get a good reward in the parliamentary election due in 2014, for the recent hike of utility prices. "You (government) have hit us the second time in two weeks. The second hit came before the injury of the first one was healed up," said another commenter in the internet. Cost of production will rise in all industries including the garment sector, which earns more than 80 per cent of the country's export earnings, totalling $23 billion a year. Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in a press statement issued Thursday, said that it would face serious difficulties as the hike would further increase the costs of production and transportation and thus decrease the sector's competitiveness in the global market. This will increase cost of living as the prices of utilities including water supply will increase. Electricity bill for lighting homes, shops, offices, schools, shopping centres, bazaars etc., will rise, raising the pulling up prices for every commodity including food, the sources pointed out. It will have a chain of effects to increase prices of all commodities, because life without electricity is unthinkable, another trader said. Besides DESCO, Dhaka Power Distribution Company Ltd (DPDC), Rural Electrification Board (REB) and West Zone Power Distribution Company (WZPDC) are the other bulk electricity buyers who purchase electricity from the state-managed BPDB to sell it to all categories of consumers.