The Bangladesh Energy Regulatory Commission holds a public hearing today on a power board proposal for increasing the bulk rate of electricity by 50 per cent with effect from July 1.
An official said that the commission had taken cognisance of the proposal on the grounds that the government would, otherwise, need to shelve out a huge amount of money in subsidy because of a sharp increase in the cost of electricity generation after fuel oil-fired plants came into operation in late 2010.
The state-run Power Development Board is the only authority which generates electricity and also buys it from power generation companies in both the public and the private sector and sells it to the five state-run distribution agencies.
The official said that the Prime Minister’s Office had also ‘requested’ the energy commission to increase the the bulk power price in accordance with what the power board had sought.
The commission was also thinking of increasing the bulk power price for distribution agencies to the level of average generation cost as the generation cost had increased because of the governments rental power policy to meet the demand
for power in a short span of time, he said.
The commission in five phases since February 2011 has already increased the bulk power prices by 69.6 per cent on an average — from Tk 2.37 a unit to Tk 2.63 with effect from February, then to Tk 2.80 a unit with effect from August, then to Tk 3.27 with effect from December 2011 and then to Tk 3.74 a unit with effect from February 2012 and then again to Tk 4.02 a unit with effect from March.
After increasing the bulk prices, the commission has also increased retail prices by 33 per cent on an average — from Tk 4.0 a unit to Tk 5.32 a unit in 14 months.
According to the power board, it would need to give Tk 12,500 crore in subsidy as it estimated that its average generation cost would be Tk 6.85 a kilowatt-hour (unit) in the 2012–13 financial year but the board sells electricity for Tk 4.02 a unit on an average to distribution agencies.
On June 6, the power board in a proposal requested the commission to allow it to sell electricity for Tk 6.03 a unit to distribution agencies and to allocate Tk 3,684 crore in subsidy for the financial year.
The board also assessed that the expenditure of the five distribution agencies would increase by 30 per cent if the commission raised the bulk power price by 50 per cent.
Distribution agencies, however, sought an increase in retail prices of power in the range of 50–57 per cent with effect from July 1, saying that they would, otherwise, have to incur losses.
The commission chair, Syed Yusuf Hossain, told New Age that the it would assess the power board proposal and the cross-examination of the power board by stakeholders before it would give its verdict.
Stakeholders and experts, however, alleged that the commission had always found power board proposals for increasing electricity prices ‘justified’ and gave its ‘judgement’ in accordance with the state-run power authority’s demand without pursuing the authority for increasing electricity generation through cheaper means.