Electricity to be costlier again from next week

M Azizur Rahman Electricity is set to be costlier again by next week as the energy regulator has decided in principle to raise the tariff to help reduce losses of state-owned power entities and woo private entrepreneurs to invest in power generation. "We have decided to raise electricity tariff for Bangladesh Power Development Board (BPDB) by next week," BERC Chairman Syed Yusuf Hossain told the FE Saturday. A public hearing on the tariff hike proposal of the BPDB will be held today (Sunday), Bangladesh Energy Regulatory Commission (BERC) chairman said. He said tariff for all other state-owned power entities will be raised by first week of next month. The BERC chairman did not disclose the rate of electricity tariff hike. The extent of the hike will be decided after scrutinising proposals of the power entities, he added. Officials said all power distribution entities including BPDB, Dhaka Power Distribution Company Ltd (DPDC), Dhaka Electric Supply Company (DESCO), Rural Electrification Board (REB) and West Zone Power Distribution Company have submitted different rates of electricity tariff hike proposals separately to BERC. Among these firms only BPDB is involved in electricity generation and produces 40 per cent of the country's overall electricity output. They have strongly pleaded for raising the electricity tariff to cope with the mounting costs in purchasing electricity from the power generation companies including high-cost diesel and furnace oil-fired power plants. Currently, Bangladesh's overall electricity generation is around 5,000 megawatts (mw) against the demand for over 6,500 mw. Among the distributors, REB has major stake and supplies 34.87 per cent of the total electricity output to the user ends, followed by BPDB at 25.99 per cent, DPDC 20.98 per cent, DESCO 11.53 per cent and WZPDCL 6.61 per cent. Officials said the hike in electricity tariff will reduce the burden of a mounting subsidy bill on the public exchequer and its direct or indirect shifting to the state-owned power entities. The government will have to pay around Tk 90 billion (US$1.21 billion) in subsidies to the parent state-owned power entity, BPDB, alone in the current fiscal year 2011-12 (July-June), if the tariff is not hiked, BPDB chairman ASM Alamgir Kabir told earlier. The amount of subsidy required for the current fiscal for BPDB is double the previous year's of Tk 45 billion. Immediately after the commissioning of new high-cost rental and quick rental power plants last year, BPDB had sought to raise the bulk electricity tariff by 12 per cent in every six months or at an annualised rate of over 25 per cent for years, up to 2013 to help reduce the amount of subsidy and ensure payment against electricity purchase from the power plant sponsors. But BERC raised power tariff by 11 per cent for bulk consumers and 5.0 per cent for retail consumers from February 1, 2011. Bulk power tariff was also raised further by 6.66 per cent from August 1, 2011 meaning that overall hike in power tariff for bulk consumers is now 18.14 per cent higher than that of pre-February, 2011. Following the hike, the average bulk tariff rate of electricity increased to Tk 2.80 per unit (1 kilowatt-hour) from the previous Tk 2.37 per unit. But the BPDB has been purchasing electricity at Taka 13 to Tk 14 per unit from the diesel-fired rental and quick rental power plants and at around Tk 7.0 per unit from furnace oil-fired power plants, said a BPDB official. The retail electricity tariff for the residential clients who are consuming electricity from 0-100 units is now Tk 2.60 per unit, 101-400 units Tk 3.465 per unit and above 400 units is Tk 5.93 per unit. For small-scale industries new flat rate of power tariff is now Tk 4.56 per unit and for commercial and office establishments Tk 5.85 per unit. There are also different tariff structures for high voltage and extra high voltage categories. Electricity tariff is payable on monthly basis with 5.0 per cent value added tax (VAT). To reduce losses, BPDB on October 5 last placed a tariff hike proposal within the ranges from 7.6 per cent to 34 per cent for different sorts of retail consumers. DPDC has proposed to hike electricity tariff by 11.93 per cent on an average for its clients REB by 10 per cent, DESCO 12 per cent and WZPDC 11 per cent.