Power tariffs may rise pro rata from March 1 as initial government course under a new reform recipe to rescind state subsidy on this sector within next three years.
Energy experts and economists take strong exception to the government proposal to further increase electricity tariffs. They rather suggest reappraisal of the power sector's financial management, specifically pointing out excessive and questionable spending, as a more effective remedy for the sector's financial woes.
Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) is likely to raise the power tariffs by administrative orders in a couple of days, a senior official of the state-run Bangladesh Power Development Board (BPDB) told the FE Monday.
"A gazette notification to this effect is set to be published soon," he added.
State Minister for the MPEMR Nasrul Hamid told newsmen that unlike the previous hikes, the government has planned to adjust upward the extent of power tariffs not across the board but on the basis of consumption patterns of consumers.
The power-tariff hike might range between 4.0 per cent and 8.0 per cent for different categories of consumers.
The more power the clients consume, the more price will they have to pay under the next power-tariff permutation.
The government last year amended the Bangladesh Energy Regulatory Commission (BERC) Act to assume rights of adjusting gas and power tariffs bypassing public hearings and the regulator, a senior BERC official said.
In maiden exercise of self-right in energy-pricing regime, the government raised both power and natural-gas tariffs last year by executive orders under the amended law.
In last year's raise electricity tariffs were hiked thrice at retail level in three consecutive months -- January, February and March -- by around 5.0 per cent at each go to reduce price gap between electricity generation and sales.
Also raised were bulk electricity tariffs by up to 7.36 per cent across the board with effect from February 1, 2023.
Currently, lifeline power consumers, who use up to 50 units (kwh) a month, pay Tk 4.35 per unit.
Those who use 0 to 75 units are billed Tk4.85 per unit and those who consume 76 to 200 units pay Tk6.63 per unit.
On the crescendo, electricity users of 201 to 300 units are paying Tk6.95 per unit, rates for users of 301 to 400 units are Tk7.34 and for 401 to 600 units Tk11.51 a unit.
Tariff rate for the retail-level consumers who use electricity above 600 units is Tk13.26.
Contacted for his view of the move, vice-president of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam termed government raising power and natural-gas tariffs by executive order a 'bad example', which he thinks "will encourage widespread corruption and irregularities in the power sector".
"This move will be detrimental to the accountability and transparency being established by BERC public hearings," he says.
He fears that bumping up power price would have cascading effect on life and business, at this trying time. "It will fuel up the already-inflated inflation further," says the consumer-rights campaigner.
Energy-expert Prof M Tamim stresses reducing the cost of electricity generation instead of raising tariffs, as reports say 'system loss' is a major cause of high power-production cost in Bangladesh.
He says the outcome of reducing electricity-generation cost is a single factor that would greatly help sustainable economic growth of the country.
Sources have said the Finance Division has so far provided Tk 57 billion to state-run Bangladesh Power Development Board (BPDB) only in the current fiscal year (2023-24) as subsidy to facilitate electricity purchase from power producers who include a new band of private entrepreneurs.
Over the years, the Finance Division has provided subsidy for the BPDB to purchase electricity from the producers as its purchasing cost of electricity from power-plant owners is higher than its selling prices to different power-distribution companies and the consumers.
Higher electricity-generation costs of different power plants, including independent power producers (IPPs), small IPPs, and rental-and quick-rental power plants, are forcing BPDB to buy electricity from them at higher rates, a senior BPDB official said about the much-hyped quick remedy for electricity shortages.
Outstanding subsidy requirement of the BPDB, as of June 2023, amounted to around Tk 98.30 billion, which had soared to around Tk 256.54 billion until September in the past year, the official added.
A UNB report says the critics observe that currently there is 42 percent surplus electricity that can be attributed to government deals to set up costly power plants.
"Rampant, unjust expenses - from state-owned company-board remunerations to large-scale power-purchase deals - underscore the need for financial rectification over tariff hikes," says Prof SM Shamsul Alam.
Sources have said pricing imbalance has led to a staggering loss of Tk 47,788 crore for the fiscal year, as the government grapples with purchasing electricity from private and international sources at significantly higher rates.
The government has been facing great trouble as it has to purchase electricity worth Tk 82,778 crore from private sector power producers, while it generates electricity worth Tk 13,307 crore from its own plants.
An annual BPDB report also shows that its average per-unit production cost from its own plants is Tk 7.63, while it is Tk 14.62 at the independent power producers or IPPs (private sector). At rental plants, the cost is Tk 12.53, at public plants Tk 6.85, and power imported from India cost Tk 8.77 per unit.
Sources in the BPDB have said that in the last decade and a half, electricity prices have been increased on 11 occasions at the wholesale level and on 13 occasions at the consumer level.
In the current fiscal 2023-24, the gap between production cost and selling rate has further widened, and now average production cost of each unit is about Tk 12 while it's selling at Tk 6.7 per unit.
Prof Shamsul Alam says the unjust expenses in the state-owned power and energy entities have been established in the hearings of the Bangladesh Energy Regulatory Commission (BERC).
"But no steps were taken by the Power and Energy Ministry to address those issues. Rather, the regulatory body's authority was taken away and it was turned non-functional by amending the relevant law," the energy expert told UNB.
He said that in every case the government was found reluctant to take action to reduce the unjust expenses in the power and energy sector.
He also observed that the Rapid Increase of Power and Energy Supply (Special) Act has been the key to creating the unbearable situation for which the government has to provide a huge capacity charge to the private power plant operators and subsidy to state entities.
"Now, the reality is that despite having 42 percent surplus electricity, the country has to endure significant load shedding, even during winter," he said.
He said that it's "ridiculous" that despite such surplus electricity and an obligation of capacity charge putting pressure on the economy, the government has announced a plan to import 9,000 MW of electricity from abroad.
M. Tamim, special assistant to the chief adviser of the former caretaker government, said that without reducing the cost, the onus of the increased production cost is being imposed on the consumer.
"This way, the government subsidies can be reduced by increasing the electricity tariff. But it will neither address the dollar crisis, nor resolve the fuel import problem. So, load shedding cannot be prevented by increasing the power tariff," he said.
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