BERC bins devious bid for rate raise

In an unprecedented turn of events, the energy regulator finally keeps the bulk electricity tariffs unchanged, as it found the hike proposal skipped the information on government subsidy.
Bangladesh Power Development Board ( BPDB) received around Tk 170 billion as subsidy from the government last year, which it did not mention in the tariff-hike proposal, the BERC chairman said in the commission verdict delivered Thursday.
A BPDB official in the virtual meeting, however, informed that the power board took around Tk 128 billion last year as government subsidy, not Tk 170 billion.
"We found some data ambiguities in the bulk tariff-hike proposal and the petitioner did not provide detailed economic impact assessment (EIA) report either," said the Bangladesh Energy Regulatory Commission (BERC) chairman, Md Abdul Jalil.
Besides, the state-run BPDB didn't mention the amount of subsidy it received from the government, he said as grounds for the commission rejection of the proposal that relieves commoners of counting additional cost--at least for the 'time being'.
"These data ambiguities and lack of sufficient information did not support us to take a (realistic) decision," the BERC chair said, while briefing in a virtual conference with the media.
"The commission held a special meeting this morning before taking decision," he added. The petitioner, however, has rights to appeal before the commission within 30 days for a review of the decision.
Once the petitioner appeals, the commission will decide next course of action as per the existing regulation, he said, responding to a query whether the tariffs would be raised after the review.
Mr Jalil could not also say whether fresh public hearing would be required to be arranged following the appeal. Decision on the fresh public hearing will be taken as per the law, he said.
He preferred to keep mum when asked whether the decision on keeping the power tariffs unchanged was swayed by political considerations and the current severe load-shedding, in order to appease the public. The BERC's order of 2020, delivered during the previous tariff hikes, remained in use, said the BERC chairman in his cryptic remark.
The commission had increased both bulk-and retail-level electricity tariffs since March 1, 2020 through that verdict.
Over the past one era the BERC had raised power tariffs nine times through which bulk power tariffs increased 118 per cent and retail tariffs 90 per cent. The commission in its latest tariff hike in 2020 had increased the bulk, or wholesale, electricity tariff by 8.40 per cent, or Tk 0.40 to Tk 5.17 per unit.
It also had slapped a 5.0 per cent simple interest rate against unpaid bills at once for retailers instead of the previous 2.0 per cent compound interest.
Value-added tax, or VAT, was also made applicable to further fatten the electricity bills of the retail-level consumers.
In the 2020 order the commission had asked the authorities concerned not to extend the tenures of high-cost oil-fired, rental, quick- rental power plants to reduce electricity-generation costs.
But, in an apparent defiance of the BERC instructions, tenures of some 10 oil fired power plants have already been extended.
The BPDB through its appeal placed in January 12, 2022 had sought around a 66-percent hike in bulk tariffs on grounds of BERC having raised natural-gas tariffs and hikes in oil prices on the international market.
The BERC hiked gas tariffs by 22.78 per cent on average with effect from June 2022 following public hearings. The new weighted average gas tariff is now Tk 11.91 per cubic metre in a rise from previous Tk 9.70.
The government had raised oil prices by up to 52 per cent on August 5, and following widespread opposition, it later cut the price of diesel, kerosene, octane and petrol by Tk 5 per liter on August 30.
Bangladesh's apex trade body and rights groups, however, had opposed the power tariff-hike proposal of the BPDB and demanded keeping the current prices unchanged at this hour of dearth.
The Consumers Association of Bangladesh (CAB) demanded import of all sorts of petroleum products by the state-run Bangladesh Petroleum Corporation (BPC) discontinuing oil-import permission to private sector as a cost-cutting measure.
The BPDB sought to hike bulk tariffs to Tk 8.58 per unit (1 kilowatt-hour) from Tk 5.17 per unit in the event of unavailability of subsidy from the government.
The power board in its proposal to the BERC had argued that it would have a deficit of around Tk 302.51 billion in 2022 if the bulk-electricity tariffs were not hiked, stating that its electricity-purchase cost of around 88.99 billion units of electricity would soar to around Tk 741.89 billion and sale price would be around Tk 439.37 billion.
It had claimed that the imposition of import duties and tax on furnace oil since June 2020 increased tax-related costs for electricity generation by around 34 per cent.
The imposition of 5.0-percent VAT on coal and soaring prices of coal on the international market have increased electricity-generation costs in coal-fired power plants, the BPDB stated in its proposal.
Per-unit (1-kilowatt-hour) energy cost to generate electricity soared by 48.35 per cent to Tk 3.16 in fiscal year (FY) 2020-2021 from Tk 2.13 unit of FY'20, the country's lone buyer of electricity from power producers - BPDB - argued.
Electricity-generation costs per unit might escalate further to around Tk 4.48 per unit in FY '22 with soaring global oil, coal and LNG prices, it had feared.
Country's achieving cent-percent electrification increased electricity-generation costs by Tk 0.05 per unit as the number of low-cost electricity consumers soared as a consequence, the BPDB had stated.

Azizjst@yahoo.com