Govt, BERC at loggerheads over benchmark tariff
Sunday, 18 April 2010
M Azizur Rahman
The government and the energy regulator are at loggerheads over fixing benchmark electricity tariff based on which the former has planned to purchase electricity from power plants to be built by foreign firms on unsolicited proposals, a top government official said Saturday.
The power ministry has recently asked the Bangladesh Energy Regulatory Commission (BERC) to fix the benchmark electricity tariff in accordance with the kinds of fuel and locations of the planned power plants.
But the BERC said the existing commission rules do not permit it to fix any 'benchmark' price of electricity.
"Under the BERC rules there is no provision for fixing benchmark prices of electricity," BERC Chairman Syed Yusuf Hossain told the FE Saturday.
"The commission currently considers tariff adjustment of power reviewing at least one year's fiscal performance of the company concerned. But for the new companies the commission cannot fix any tariff under its current provision," he said.
Even the word 'benchmark' was not incorporated in any place of the commission act based on which the BERC remains operational, he added.
The power ministry last month amended the 'Policy Guidelines for Enhancement of Private Participation in the Power Sector, 2008' allowing building power plants by local and foreign firms on unsolicited proposals avoiding tendering process in an unprecedented move to face the country's worst-ever power crisis.
Under the amended policy the government would purchase electricity from the firms based on a benchmark price to be fixed by the BERC.
The amended policy has allowed the private firms to run their plants with any fuel like furnace oil, coal, imported gas, wind, solar power, hydro power, waste and liquefied natural gas.
But the BERC would have to fix the benchmark electricity tariff in accordance with the kinds of fuel to be used in the plants and their locations, the policy spells out.
The commission chairman has sought legal coverage by amending the existing BERC rules before fixing the benchmark electricity tariff.
"Otherwise the commission might fall into trouble," the BERC chairman feared.
He also sought constitution of a separate committee incorporating representatives from power ministry, Power Development Board, National Board of Revenue, academicians, legal experts, business bodies and other relevant private sector agencies to ensure fixation of the benchmark electricity prices in a transparent manner.
Power ministry officials said the government has amended the policy to add around 600 megawatts (mw) of electricity within the shortest possible time avoiding the time consuming tendering process.
It has already initiated talks with several foreign firms including Aggreko, US companies General Electric and Alsthom to set up these plants across the country, the official added.
But without fixing the benchmark electricity prices by BERC the government would not be able to reach any deal, the official said categorically.
Under the amended power sector policy no prior experience by private firms in Bangladesh would be required for building the power plants.
Private companies would be able to set up power plants anywhere across the country after attaining licence from the energy regulator if their proposals become technically viable.
Apart from selling their output to state-owned power entities the private firms would also have their liberty to sell electricity to any large private consumers.
Private sector, however, welcomed the policy saying it is a landmark decision by the government to ease the nagging electricity crisis.
It would help a lot of new power sector entrepreneurs enter power business, said former president of the Chittagong Chamber of Commerce and Industry (CCCI) Saifuzzaman Chowdhury who is also the chairman of Aramit Ltd.
"I have planned to install one such plant," he added.
The government and the energy regulator are at loggerheads over fixing benchmark electricity tariff based on which the former has planned to purchase electricity from power plants to be built by foreign firms on unsolicited proposals, a top government official said Saturday.
The power ministry has recently asked the Bangladesh Energy Regulatory Commission (BERC) to fix the benchmark electricity tariff in accordance with the kinds of fuel and locations of the planned power plants.
But the BERC said the existing commission rules do not permit it to fix any 'benchmark' price of electricity.
"Under the BERC rules there is no provision for fixing benchmark prices of electricity," BERC Chairman Syed Yusuf Hossain told the FE Saturday.
"The commission currently considers tariff adjustment of power reviewing at least one year's fiscal performance of the company concerned. But for the new companies the commission cannot fix any tariff under its current provision," he said.
Even the word 'benchmark' was not incorporated in any place of the commission act based on which the BERC remains operational, he added.
The power ministry last month amended the 'Policy Guidelines for Enhancement of Private Participation in the Power Sector, 2008' allowing building power plants by local and foreign firms on unsolicited proposals avoiding tendering process in an unprecedented move to face the country's worst-ever power crisis.
Under the amended policy the government would purchase electricity from the firms based on a benchmark price to be fixed by the BERC.
The amended policy has allowed the private firms to run their plants with any fuel like furnace oil, coal, imported gas, wind, solar power, hydro power, waste and liquefied natural gas.
But the BERC would have to fix the benchmark electricity tariff in accordance with the kinds of fuel to be used in the plants and their locations, the policy spells out.
The commission chairman has sought legal coverage by amending the existing BERC rules before fixing the benchmark electricity tariff.
"Otherwise the commission might fall into trouble," the BERC chairman feared.
He also sought constitution of a separate committee incorporating representatives from power ministry, Power Development Board, National Board of Revenue, academicians, legal experts, business bodies and other relevant private sector agencies to ensure fixation of the benchmark electricity prices in a transparent manner.
Power ministry officials said the government has amended the policy to add around 600 megawatts (mw) of electricity within the shortest possible time avoiding the time consuming tendering process.
It has already initiated talks with several foreign firms including Aggreko, US companies General Electric and Alsthom to set up these plants across the country, the official added.
But without fixing the benchmark electricity prices by BERC the government would not be able to reach any deal, the official said categorically.
Under the amended power sector policy no prior experience by private firms in Bangladesh would be required for building the power plants.
Private companies would be able to set up power plants anywhere across the country after attaining licence from the energy regulator if their proposals become technically viable.
Apart from selling their output to state-owned power entities the private firms would also have their liberty to sell electricity to any large private consumers.
Private sector, however, welcomed the policy saying it is a landmark decision by the government to ease the nagging electricity crisis.
It would help a lot of new power sector entrepreneurs enter power business, said former president of the Chittagong Chamber of Commerce and Industry (CCCI) Saifuzzaman Chowdhury who is also the chairman of Aramit Ltd.
"I have planned to install one such plant," he added.