Bulk power tariff hiked by 33.57pc in two phases

FE Report The energy regulator Thursday raised electricity tariff for bulk consumers by 33.57 per cent on an average, effective in two phases, to reduce mounting losses incurred by state-owned Bangladesh Power Development Board (BPDB). "Under the first phase we have decided a hike by 16.79 per cent, or Tk 0.47 per unit (1 kWh), to Tk 3.27 per unit on an average, with effect from December 01, 2011," Bangladesh Energy Regulatory Commission (BERC) chairman Syed Yusuf Hossain told newsmen Thursday. Electricity tariff for bulk consumers will increase further by 14.37 per cent, or Tk 0.47 per unit, to Tk 3.74 per unit from February 01, 2012, meaning that overall tariff will be increased by 33.57 per cent, the BERC chairman said. Currently BPDB's average bulk tariff rate is Tk 2.80 per unit, he said. The commission chairman added that Thursday's tariff hike for bulk consumers would be followed by a fresh hike for retail electricity consumers, which would be announced within the next 10 days. He said the new bulk tariff was calculated taking into account the subsidy of Tk 50 billion from the government to the BPDB against its total requirement of Tk 179 billion. BPDB will neither be a profitable entity nor will it reach a break-even point despite the hike, he said. The BPDB earlier sought to raise the bulk rate of electricity in phases by 15 per cent in every three months from November 2011 until July 2012 and then by another 14 per cent in January 2013. BPDB says power supply cost to bulk consumers against per unit of electricity is now Tk 4.15. Bulk electricity supply costs will increase to Tk 4.86 per unit by the end of current fiscal year (FY 2011-12), it argued in its tariff hike proposal to the BERC. "Bulk electricity supply cost was only Tk 2.62 per unit during FY 2009-10. But due to installation of dozens of high-cost diesel and furnace-oil fired power plants, the supply costs will rise by 85 per cent to Tk 4.86 per unit by FY 2011-12 compared to that of 2009-10," BPDB had said justifying the enhancement of bulk tariff rate hike to BERC. Due to this hike, all the state-run distribution entities including Dhaka Power Distribution Company Ltd (DPDC), Dhaka Electric Supply Company (DESCO), Rural Electrification Board (REB) and West Zone Power Distribution Company (WZPDC) will have to count extra money to purchase electricity from the BPDB. The distribution companies buy electricity from the BPDB at bulk level of 132 kilo-volt (kV) and 33 kV and sells electricity at retail tariff rates to reach end-users. Among the distribution companies, DPDC and DESCO have been providing electricity to retail consumers in Dhaka, WZPDC in Khulna and south-western region, WZPPDC in north-western region, REB in rural areas. Apart from being a generation agency, BPDB also operates as a distribution company in some districts including Chittagong and Sylhet. BERC has ordered comparatively higher bulk tariff rates for DPDC and DESCO, compared to other distribution companies operating outside the capital. The new bulk tariff for DPDC and DESCO at 132 kV level has been increased to Tk 3.56 per unit from December 1, 2011 and Tk 4.20 per unit from February 1, 2012. For 33 kV level the bulk tariff has been increased to Tk 3.60 per unit from December 1, 2011 and Tk 4.24 per unit from February 1, 2012. The commission has raised bulk tariff for REB's 132 kV level to Tk 2.91 per unit from December 1, 2011 and Tk 3.17 per unit from February 1, 2012. BERC earlier raised bulk tariff by 11 per cent from February 1, 2011 and another hike by 6.66 per cent from August 1, 2011. BGMEA concerned Meanwhile, another FE report adds: Garment manufacturers have expressed their deep concern over the hike of bulk power tariff, saying that it will further decrease the sector's competitiveness in the global market. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in a press release issued Thursday said the manufacturers will face serious difficulties in producing garments as the hike will further increase production and transportation costs. Bangladesh Energy Regulatory Commission has increased the price of electricity at bulk level by 33.57 percent that will be effective in two phases. The first hike of 16.79 per cent or Tk 0.47 per unit will come into effect on December 1 while the second increase of 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. It said export orders for the products the apparel makers are now producing have been negotiated earlier. "So the producers will have to pay the costs." BGMEA Acting President Siddiqur Rahman said at a statement that production costs of the sector increased significantly compared to that of their global competitors due to recent hike in the prices of diesel and furnace oil as well as high rate of bank interest. "In the circumstances, it will be very tough for garment manufacturers to keep the growth continuing. The apparel owners are really worried over the decision," he said. The acting BGMEA president requested the government to retain the previously-charged power tariff in the garment factories for protecting the struggling sector where more than three million people were employed.