BERC amendment bill: A tool to make energy costlier

With the reasoning to maintain harmony between energy prices in the domestic and international markets, the Ministry of Power, Energy and Mineral Resources on Tuesday placed the Bangladesh Energy Regulatory Commission (Amendment) Bill, 2020 in the parliament.

The bill will empower the BERC to make any change in tariff more than once per financial year. Currently, the law permits the commission to make any change in tariff only once per year.

This initiative has been taken following a case that was filed at the High Court in 2017, challenging the BERC for increasing the gas price twice with a single order. The court had then stayed the price hike of the second phase.

If this bill is approved in parliament, then the government will be able to increase the gas and electricity prices multiple times a year.

However, State minister for Power, Energy and Mineral Resources Nasrul Hamid said otherwise while placing the bill in parliament.

"The price of energy changes continuously in the international market, and the government needs to adjust the price in the local market accordingly. And that is why the amendment was proposed," he said.

Later, speaking to The Business Standard, Nasrul Hamid added that the amended bill was placed before parliament based on a request by the BERC.

"The BERC thinks that in future we will need to increase or decrease energy price when we reach a stable energy situation. That is why they wished to bring the revision to the existing law," he said.

Energy experts are concerned that the bill will help the government extract more money from the power and energy sector by increasing tariff.

They pointed out that in the last decade the power and gas tariffs were increased ten times. If the government wants to adjust the energy tariff with the international price, they should do it with more transparency.

Prof Dr Nurul Islam, a senior energy expert in the country, said the law should focus on the "adjustment of the energy price consistent with the international market" and "there should be a humanitarian aspect too."

"Under this law, the energy price in Bangladesh should increase or decrease based on the ups and downs of price in the international market," he said.

To uphold the people's respect for this law, he opined that the government should organise a hearing.

Some experts said this initiative has been taken to source more money from the sector so that the government can continue its extravagances and irrational expenditure.

Earlier in December, The Consumers Association of Bangladesh (CAB) termed the initiative as a tool to make gas and electricity more expensive.

"Now they can increase the energy price at any time in a year, which is not possible in the existing act. The government has changed the act to raise money from consumers for its extravagant expenses," said M Shamsul Alam, energy advisor to the CAB.

Data from the Bangladesh Power Development Board (PDB) revealed that in the 2018-2019 financial year, it had to pay Tk8,930 crore as a capacity charge to independent power producers and rental power plants. Although, around 43 percent power generation capacity remained idle.

The total payment to independent producers, small independent producers and rental plants was Tk20,781 crore in the same fiscal year.

On February 27, the price of electricity per kilowatt-hour was hiked by 5.3 percent at retail and 8.4 percent at wholesale levels.

In July last year, the government increased gas price for all users on average by 32.8 percent which is an all-time high, putting consumers under an additional burden of Tk8,620 crore per annum.