Bangladesh Energy Regulatory Commission is set to increase electricity prices by at least 5 percent or Tk 0.26 per unit at consumer level in a month, commission officials said yesterday.
This will be the second hike this year and the fifth since the Awami League government took office in 2009.
The fresh increase will take the retail-level power tariff to Tk 5.61 per unit from its current Tk 5.35.
The retail tariff went up by Tk 0.31 a unit on February 1, taking the price to Tk 5.35. It came two months after the retail price soared by more than 15 percent per unit on December 1 last year.
"Power prices at consumer level will go up within a month," commission chairman Syed Yusuf Hossain told journalists at his office in the capital yesterday.
At a public hearing yesterday, the evaluation committee of the commission recommended a tariff hike by 5.79 percent or Tk 0.22 per unit at bulk level to be implemented within a week.
Contacted by The Daily Star, Amjad Khan Chowdhury, president of Metropolitan Chamber of Commerce and Industry, said, "Commodity prices and export costs will shoot up if the proposed hike takes effect."
He agrees that the government cannot avoid increasing power tariff due to the rise in petroleum prices, but says, “We need quality service from the government. We want power supply without disruption.”
Yesterday's hearing was held following a letter by the Power Development Board (PDB) to the commission on March 12 for increasing the bulk level prices by Tk 0.41 per unit due to hike in petroleum prices.
But the evaluation committee proposed an increase of Tk 0.22 per unit. When finalised, the power tariff at bulk level will be Tk 3.96 a unit, officials said.
The PDB in its letter to the energy regulatory commission said prices of diesel and furnace oil, two basic raw materials to generate electricity, rose by Tk 5 per litre each in December last year.
At present, diesel sells at Tk 61 per litre and furnace oil at Tk 60. Therefore, the cost of power generation has increased, the letter said.
According to the letter, the production cost of electricity has gone up by Tk 0.41 a unit from this month owing to hikes in petroleum prices.
From March, per unit production cost will reach Tk 6.68 from Tk 5.29, the letter said, asking the commission to increase power prices from this month.
Prof Shamsul Alam, energy adviser of the Consumers Association of Bangladesh, represented the consumers at the hearing, which was also attended by PDB Chairman Alamgir Kabir.
At the hearing, the commission chairman urged the PDB high-ups to strengthen the internal audit system of the state-owned agency for enhancing management and maintenance efficiency.
“This recommendation is not final; it is the observation of the evaluation committee. The prices of electricity might be less or even more than the recommended rate, but it will surely go up,” he said after the hearing.
Tariff hike is part of the government move to slash subsidies in the power sector.
In the current fiscal year, the government is set to allocate Tk 20,000 crore in subsidies for the sector, according to official estimates.
Ahsan H Mansur, executive director of Policy Research Institute (PRI), said increasing power prices is a very difficult decision for the government to make.
It hurts the public but the government has no other option when the prices of petroleum products shoot up, he said.
“The price hike is justified to some extent because the government wants to bring subsidy down to a tolerable level,” he told The Daily Star over the phone.
This will be the second hike this year and the fifth since the Awami League government took office in 2009.
The fresh increase will take the retail-level power tariff to Tk 5.61 per unit from its current Tk 5.35.
The retail tariff went up by Tk 0.31 a unit on February 1, taking the price to Tk 5.35. It came two months after the retail price soared by more than 15 percent per unit on December 1 last year.
"Power prices at consumer level will go up within a month," commission chairman Syed Yusuf Hossain told journalists at his office in the capital yesterday.
At a public hearing yesterday, the evaluation committee of the commission recommended a tariff hike by 5.79 percent or Tk 0.22 per unit at bulk level to be implemented within a week.
Contacted by The Daily Star, Amjad Khan Chowdhury, president of Metropolitan Chamber of Commerce and Industry, said, "Commodity prices and export costs will shoot up if the proposed hike takes effect."
He agrees that the government cannot avoid increasing power tariff due to the rise in petroleum prices, but says, “We need quality service from the government. We want power supply without disruption.”
Yesterday's hearing was held following a letter by the Power Development Board (PDB) to the commission on March 12 for increasing the bulk level prices by Tk 0.41 per unit due to hike in petroleum prices.
But the evaluation committee proposed an increase of Tk 0.22 per unit. When finalised, the power tariff at bulk level will be Tk 3.96 a unit, officials said.
The PDB in its letter to the energy regulatory commission said prices of diesel and furnace oil, two basic raw materials to generate electricity, rose by Tk 5 per litre each in December last year.
At present, diesel sells at Tk 61 per litre and furnace oil at Tk 60. Therefore, the cost of power generation has increased, the letter said.
According to the letter, the production cost of electricity has gone up by Tk 0.41 a unit from this month owing to hikes in petroleum prices.
From March, per unit production cost will reach Tk 6.68 from Tk 5.29, the letter said, asking the commission to increase power prices from this month.
Prof Shamsul Alam, energy adviser of the Consumers Association of Bangladesh, represented the consumers at the hearing, which was also attended by PDB Chairman Alamgir Kabir.
At the hearing, the commission chairman urged the PDB high-ups to strengthen the internal audit system of the state-owned agency for enhancing management and maintenance efficiency.
“This recommendation is not final; it is the observation of the evaluation committee. The prices of electricity might be less or even more than the recommended rate, but it will surely go up,” he said after the hearing.
Tariff hike is part of the government move to slash subsidies in the power sector.
In the current fiscal year, the government is set to allocate Tk 20,000 crore in subsidies for the sector, according to official estimates.
Ahsan H Mansur, executive director of Policy Research Institute (PRI), said increasing power prices is a very difficult decision for the government to make.
It hurts the public but the government has no other option when the prices of petroleum products shoot up, he said.
“The price hike is justified to some extent because the government wants to bring subsidy down to a tolerable level,” he told The Daily Star over the phone.
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