Panel recommends hiking bulk power tariff by 58% to cut subsidy

Streetlights are on in a sunny day at Bijoy Sarani intersection in Dhaka. Photo: Mahmud Zaman Ovi
The technical committee of Bangladesh Energy Regulatory Commission has recommended hiking bulk power tariff by 58 percent to cut subsidies, a proposal the associations of consumers and businesses have fiercely opposed.

The commission raised bulk power tariff by 8.4 percent to Tk 5.64 per unit, or kilowatt hour, for the last time in 2020, but the government decided to provide Tk 0.47 per unit as subsidy.

Bangladesh Power Development Board recently proposed increasing the price further to Tk 8.56 per unit to rid itself of subsidy.

After a public hearing on the proposal, the BERC technical committee recommended hiking the price to Tk 8.16 per unit.

According to the committee’s estimates, PDB will incur a loss of Tk 400 billion if it sells nearly 82 billion units of power to the distributors at the current rate in 2021-22 fiscal year. It said the new tariff can be readjusted if the government continues to give subsidies.

A hike in bulk power tariff will impact retail electricity prices, BERC Chairman Abdul Jalil admitted. In that case, eventually prices of commodities that are produced by using power will also rise.

In the hearing, Professor M Shamsul Alam, senior vice-president at the Consumers Association of Bangladesh, termed the proposal to hike power prices “illogical and unjustified”.

Cutting waste of power, systems losses, taxes on fuel and corruption will bring power prices to a tolerable level, he said.

Mostofa Azad Chowdhury Babu, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industries, said the economic impact of a power price hike was not included in the analysis.

“Raising power price in the current condition will be suicidal.”