Originally posted in New Age on 28 February, 2023
Farmers, households see largest hike
The government, in an executive order on Tuesday, increased the average retail electricity price by 5 per cent, dealing yet another blow to consumers still trying to cope with the impacts of the previous round of price hikes barely a month ago.
This was the third time since January that the power price was hiked — always by 5 per cent —through an executive order after the government assumed the role of fixing power prices bypassing public hearings by amending the Bangladesh Energy Regulatory Commission Act.
Outraged by these frequent electricity price hikes, consumer rights bodies accused the government of exploiting and robbing people to make up for its flawed power and energy policy that was benefiting vested groups.
A gazette notification published in the afternoon said that the new retail prices, announced for all 23 consumer categories, would be effective from March.
The average price of each unit of electricity rose to Tk 8.25 from Tk 7.86 with the latest hike.
The retail electricity price has been readjusted under the authority vested in Section 34 (ka) of the Bangladesh Energy Regulatory Act, 2003, the gazette notification said, for adjusting subsidy.
In the financial year 2021–22, the government said it gave a subsidy of Tk 12,000 crore in the power sector.
According to a November finance ministry analysis, the government would need to provide Tk 17,000 crore in power sector subsidy in the current financial year.
The power sector has requested the government an additional subsidy of Tk 32,000 crore in the current financial year.
‘Predatory expenses combined with inefficiency and corruption is creating the need for the high power sector subsidy,’ said Consumers Association of Bangladesh energy adviser M Shamsul Alam.
‘The need for high subsidy cannot be eliminated by increasing the power price every month,’ he said, describing frequent power hikes as ‘exploitative’ and ‘repressive.’
In December 2022, the government amended the BERC Act to fix energy prices in executive orders amid a severe dollar crisis.
On January 18, the government, in an executive order, increased retail piped gas prices in four consumer categories by up to 179 per cent with effect from February 1.
Energy experts and economists said that price hikes would not make the dollar crisis go away but would rather increase living costs, making life difficult for everyone, particularly the poor and people on fixed incomes.
The International Monetary Fund is lending the government $4.7 billion to come out of the dollar crisis under many conditions—one of them is reducing subsidies.
Lifeline consumers—whose monthly household electricity consumption is less than 50 units—and irrigation saw the highest rate of increase in the latest price hike.
The government announced a flat increase of 5.08 per cent, the highest increase among all 23 categories, in the irrigation and agriculture sector involving the use of pumps.
The second highest increase of 5.07 per cent was recorded for lifeline consumers, households consuming between 76 and 200 units of electricity a month, and commercial consumers.
In December 2022, the BERC increased the average bulk electricity price by 19.92 per cent.
The previous two retail price hikes came on January 10 and 30.
With the ongoing dollar crisis, exacerbated by massive power debts and capacity payments, the incumbent government is unlikely to be able to supply enough fuel anytime soon for generating adequate electricity, experts observed.
The summer-time power cut is likely to be around 3,000 MW, energy experts forecast, despite frequent price increases.
The power sector witnessed a massive fossil fuel-based expansion under the current government, largely under the protection of an indemnity act.
The US-based Energy Information Administration recently said in a forecast that authorities in Bangladesh might need to continue load shedding until the middle of 2025.
The high cost of electricity produced by the 1600 MW Godda plant that was expected to come into operation in March would increase the fiscal burden further because of the high energy price and capacity charge guaranteed in its power deal by the government.
Bangladesh cannot use even half of its installed capacity of 23,482 MW.
According to an estimate, the government paid a capacity charge to the tune of Tk 72,567 crore, almost equal to the Power Development Board’s accumulated losses of Tk 76,115 crore, over the decade until 2020–21.
A capacity charge is a payment that the government is legally bound to make to power plant owners, irrespective of whether or not power is generated by them, ensuring their return on investment with profit.
With the latest hike, the retail electricity price has nearly tripled since 2009, when the incumbent AL-led government assumed power.
In 2009, the retail price of each unit of power was Tk 3.60.
CAB and energy experts believe that such frequent price hikes could have been avoided with renewable investment and domestic gas exploration.
But the government instead increased installed capacity by more than six times in its tenure, mainly based on imported fossil fuels.
In 2019, the CAB estimated that checking inefficiencies and corruption could save Tk 10,549 crore in the power sector.
Power tariff hikes since 2009
Year Month Increase (%)
2023 February 5
2023 January 5
2023 January 5
2020 February 5.3
2017 December 5
2015 September 3
2014 March 6.96
2012 September 11.65
2012 March 6
2012 February 7
2011 December 13
2011 February 5
2009-2010 Dec-Mar 6