Now govt moves to raise retail power tariff

After submission of a review appeal by state-owned BPDB to raise bulk power tariff, now distribution companies are likely to submit their respective proposals to raise retail power tariff, official sources said.

According to a top level source at the Power Division, the Bangladesh Power Development Board (BPDB) will submit its proposal to the Bangladesh Energy Regulatory Commission (BERC) to enhance retail power tariff on Sunday next while other distribution entities will submit their respective proposals within the next week.   

State Minister for Power, Energy and Mineral Resources Nasrul Hamid also said that the distribution entities are preparing their proposals to submit to the energy regulator seeking a substantial hike in the electricity tariff at retail level.

"Power distribution companies are now working to prepare their proposals…They are calculating the possible impact on any hike in the bulk tariff," he told UNB.

The BPDB sources said the government is expecting that the BERC will announce its decision on the review appeal on bulk tariff on any day in the next week.

"We hope, BERC will raise the bulk tariff by at least 20 percent," said a top official of the BPDB, adding that, considering a possible 20 percent hike, the BPDB is seeking at least 12 percent hike in retail tariff of electricity.   

He also said all the distribution companies may submit an identical proposal in consultation with the Power Division where they may seek between 12-16 percent hike in the retail tariff.

The retail power tariff was last raised in March, 2020 by BERC after holding a public hearing.

Through an announcement, the BERC had raised the power tariff on a weighted average by 5.3 percent at retail and 8.4 percent at wholesale levels with effect from 1 March, 2020.

As per that decision, the retail power tariff was increased from Tk6.77 to Tk7.13 per unit (each kilowatt-hour) and Tk4.77 to Tk5.17 at bulk level.

There are six power distribution entities in the country which sells electricity to retail consumers across the country.

They are BPDB, Bangladesh Rural Electrification Board (BREB), Dhaka Power Distribution Company Limited (DPDC), Dhaka Electric Supply Company Limited (Desco), Northern Electricity Supply Company PLS (Nesco), West Zone Power Distribution Company Limited (WZPDCL).

On the other hand, BPDB is also a single buyer of bulk electricity in the power sector, which itself generates power and also buys electricity in bulk from different power generation companies and sells it to the distribution companies.

The distribution entities sell electricity in retail to the consumers.

The Power Division is under tremendous pressure from the Finance Ministry to raise power tariff in bulk and retail to cover its huge financial losses.

The recent commitment of the International Monetary Fund (IMF) to provide a $4.5 billion loan has increased the pressure as the donor agency has tagged a condition to decrease subsidy in the power sector and raise power tariff to cover the loss, said a Power Division official.

Against the backdrop, he said, both the BPDB and distribution entities have initiated a move to place their respective proposals to the BERC to raise power tariff in bulk and retail.

The BPDB on November 14 submitted its review appeal to the BERC to raise the bulk power tariff which remains pending for decision.

The original proposal was rejected by BERC on 13 October as there was "data ambiguity".

In the original proposal placed in May this year, the BPDB sought a rise in bulk power tariffs by 65.57 percent while a technical evaluation committee of BERC recommended a 57.83 percent hike.

The BPDB showed that it will require Tk74,189 crore in revenue to generate 88,993 million kilowatt hours (units) of electricity to supply to the power distribution companies.

But if the BPDB sells its electricity at the existing rate of Tk5.17 per unit, it will have to face a deficit of Tk30,251 crore in revenue in the calendar year 2022. So, BPDB needs to raise the power tariff by 65.57 percent to Tk8.56 per unit from Tk5.17.

Sources said the latest calculation reveals that the BPDB's revenue deficit has further increased to about Tk48,000 crore following the hike in petroleum fuel prices and also the price of dollars.

"Previously we had calculated the dollar exchange rate at Tk85. But now we have to calculate at Tk107, said a top official BPDB on condition of anonymity.