Industry Desk: Bangladesh Energy Regulatory Commission (BERC) has announced the fresh hike in electricity tariffs, both in retail and bulk levels on Thursday with effect from Sunday, amid the protest from experts and activists group.
BERC raised the average electricity tariff by 5.3 per cent or Tk 0.36 to Tk 7.13 per unit (1 kilowatt-hour) from existing Tk 6.77 per unit. The commission increased the bulk or wholesale level electricity tariff by 8.40 per cent or Tk 0.40 to Tk 5.17 per unit from existing Tk 4.77 per unit on an average.
With the latest hike the retail electricity price has increased by 98 per cent since 2009.
‘The power price has been increased as its production and transmission became costlier,’ BERC chairman Abdul Jalil explained while announcing the increase. He also said that the power production and transmission costs went up following increases in capacity charge, VAT on coal exports, depreciation, and oil and gas prices.
The BERC also slapped a 5 per cent simple interest rate against unpaid bills at once for retailers instead of the existing 2 per cent compound interest rate. Value added tax (VAT) will also be applicable on electricity bills of retail-level consumers.
The average retail price of each unit of power would now become Tk 7.13 from Tk 6.77 with the order to increase the power tariff coming into effect. In 2009, the retail price of each unit of power was Tk 3.60. However, energy experts and consumer rights activists said that the government raised the power price 10 times in last 11 years thanks to a flawed power and energy policy.
In December, following a public hearing, Consumers Association of Bangladesh (CAB) had demanded that the power price be reduced to spare the consumers the burden resulting from the government’s wrong decision.
Poor people’s monthly power expenditure would jump by up to 8.7 per cent as the life line consumers’ monthly electricity bill would increase by maximum Tk 17.50 on average as a result of the latest increase in the price, a BERC estimate shows. Life line consumers are the poorest segment of the people not being able to consume more than 50 units of electricity a month. They live mostly in rural areas and in slums in the city.
Lower middle class consumers spending an average of Tk 759 on power would need to pay Tk 803 with the implementation of the new power tariff, a 5.9 per cent increase, shows the BERC estimate.
The monthly power expenditure of the middle class people would go up by Tk 114 with the average monthly power expenditure of a middle class family rising to Tk 2,066 from Tk 1,952, a 5.8 per cent rise, according to the BERC.
For irrigation, the average monthly power expenditure would rise by Tk 188, a 5.8 per cent increase in the price compared to the previous tariff structure, the BERC estimate shows.
Small industries’ average monthly power expense would increase by 4.9 per cent while 5.3 per cent for medium industries and 5.4 per cent for large industries, the BERC estimate said.
BERC has the increased the tariff aiming to make up for Tk 3,600 crore to be incurred as deficit by the Power Development Board in 2020. The PDB also in its proposal to increase the power price had projected the deficit in 2020 to reach Tk 8,000 crore.
CAB president Ghulam Rahman said that the reasons cited for the need to increase power price were not acceptable at all. ‘The decision to raise the power price is neither just nor reasonable,’ he said. He viewed that the price hike would not have been needed had the power sector not wasted its resources and checked corruption.
In December, CAB estimated that inefficiencies and corruption increased the power sector’s annual spending by Tk 10,549 crore.
The PDB had informed the public hearing, hosted by the BERC, in December of paying Tk 59,000 crore in capacity charge to the idle power plants over the last decade. During the hearing the BERC repeated the instruction for the phasing out of seven old power plants for their power production costs were far higher than the ones established recently.
Many such retirement-age expensive power plants still remain in operation despite the demand being low compared to the country’s installed generation capacity with new power plants sitting idle.
Currently Bangladesh’s installed capacity is over 20,000 MW with the highest amount supplied reaching 12,900 MW during summer. In winter, the electricity demand falls as low as 6,000 MW.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said in a statement, “Since our costs have gone up by almost 29.40 per cent during the last four years, and simultaneously prices have steadily gone down, we can’t afford any increase of any sort.”
In a press statement, the Bangladesh Textile Mills Association (BTMA) said small and medium factories will be severely hit due to the fresh power price hike.
Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce and Industries, said that the production cost would go up due to the price hike of electricity.