CAB, FBCCI oppose move, propose alternatives

Tariffs of bulk electricity are set to be raised shortly as the country's energy regulator has almost completed necessary spadework to make the announcement, adding to shocks from inflation.
"We are working to announce the new bulk electricity tariffs by October 13-14," chairman of Bangladesh Energy Regulatory Commission (BERC) Md Abdul Jalil said Sunday, without specifying how much.
The BERC had arranged public hearing on the tariff-hike proposal from the state-run Bangladesh Power Development Board (BPDB) in May.
BPDB sought around a 66-percent hike in bulk electricity tariffs on the pretext of BERC having raised natural gas tariffs and oil-price rises on the international market.
The BERC hiked natural gas tariffs by 22.78 per cent on average with effect from June 2022 following public hearings.
The new weighted average natural gas tariff is now Tk 11.91 per cubic metre in a rise from previous Tk 9.70.
The government had raised oil prices steeply by up to 52 per cent on August 5 and following widespread opposition later lowered the rates of diesel, kerosene, octane and petrol by Tk 5 per liter on August 30.
Bangladesh's apex trade body and rights groups, however, opposed the power tariff-hike proposal of the BPDB and demanded keeping the current rates unchanged.
"It will be suicidal for the government if the bulk tariff is raised now," senior vice president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mostofa Azad Chowdhury Babu had said at the public hearing.
The Consumers Association of Bangladesh (CAB) demanded import of all sorts of petroleum products by state-run Bangladesh Petroleum Corporation (BPC) discontinuing oil-import permission to private sector as a cost-cutting measure.
CAB energy adviser Prof M Shamsul Alam also demanded running state-run combined-cycled power plants with around 67-percent plant factor instead of current 53 per cent to reduce electricity-generation costs.
The BPDB in its proposal had sought bulk tariff hike by around 66 per cent to Tk 8.58 per unit (1 kilowatt-hour) from Tk 5.17 per unit in the event of unavailability of government subsidy.
BERC's technical evaluation committee had suggested the hike by 57.83 per cent without any provision of government subsidy.
Speaking in the public-hearing session the FBCCI leader had argued that the tariff-hike proposal was faulty as it did not maintain BERC rules properly.
Natural gas supplies to privately owned captive power plants were maintained limiting or ceasing gas supplies to gas-guzzling commercially run power plants, which has increased overall electricity-generation costs, he had said while presenting the FBCCI stance over the tariff-hike proposal.
Imposition of import duties and taxes on furnace oil since June 2020 and 5.0-percent value-added tax (VAT) on coal increased overall electricity-generation costs, said Mr Azad.
He listed several issues like excess electricity-generation capacity, oil-fired power plants, delay in commissioning coal-fired power plants, wrong planning on liquefied natural gas (LNG)-supply chain also among the bottlenecks in the power sector.
The CAB leader demanded proper utilization of power development fund (PDF) and streamlining investment from the fund in BPDB's gas- based and-renewable energy projects.
The power board in its proposal to the BERC argued that it would have a deficit of around Tk 302.51 billion in 2022 if the bulk-electricity tariffs were not raised, stating that its electricity-purchase cost of around 88.99 billion units would soar to around Tk 741.89 billion and sale price be around Tk 439.37 billion.
It 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, argued the country's lone buyer of electricity from power producers - BPDB.
Electricity-generation cost per unit might escalate further to around Tk 4.48 per unit in FY '22 pushed by soaring global oil, coal and LNG prices, it feared.
Achieving cent-percent electrification in the country increased electricity-generation cost by Tk 0.05 per unit as the number of low-cost electricity consumers soared as a consequence, the BPDB argued.
Meanwhile, the government is executing austerity measures like electricity load-shedding and squeezing imports and restricting foreign tours in a bid to mitigate pressures on the country's forex reserves in the wake of a global crunch.

Azizjst@yahoo.com