Is not power price hike irrational?

When all power distribution companies are making hefty profit other than Palli Bidyut on the existing rates, what prompted the government to go for another hike in power price?

The consumers have been subjected to the eighth power price hike in eight years. Earlier in September 2015, the Bangladesh Energy Regulatory Commission (BERC) raised the average power tariff by 2.93 per cent.

The government defended the new tariff hike of power prices just by saying that such adjustment was necessary to meet the revenue requirements of the power distributors. When the distribution companies had proposed the fresh power price hike, a seven-day public hearing was held. The Consumers Association of Bangladesh (CAB) pointed out that instead of hiking the power price, the government should reduce it.

But the Bangladesh Power Development Board (BPDB) said a hike in tariff was needed due to increased use of furnace oil and diesel in power generation, to buy power from the private sector, rise in energy prices, interest paid against government loans and supplying power to rural Palli Bidyut Samity at comparatively lower prices.

 Any hike in power price is, however, bound to increases prices of goods, education and health services. It also comes as a burden on low-income people.

At a discussion meeting held in early November this year, CAB proposed a rational decrease in power tariff. A 15-point recommendation was put forward to the government. If these were implemented, according to CAB,  power generation costs could be reduced and it would have been possible to reduce the price by 28 paisa per unit.

Analysts have calculated how costs could be cut rather than increased. Yet bypassing the public outcry and the recommendations of the public hearing, the authorities went ahead with the increase in power prices. With such an act, the government has, in fact, disregarded the people's opinion. The interests of the people have been grossly ignored.

However, the Prime Minister's adviser for power, energy and mineral resources said that the latest increase in power prices is a mundane matter. This is a not at all a sensible remark, considering the additional pressure caused by this price hike on the struggling majority.

What the authorities need to do is to pay attention to reducing production costs and system loss and also bring an end to the corruption and pilferage in the power sector. Such measures will definitely reduce the costs. Power generation should be increased in more technically sound power plants and emphasis be given on furnace oil fired plants rather than those running on diesel.

As the price of fuel oil has fallen considerably in the international market, is it not possible for the government to reduce the price of power in line with the global trend? It can at least check further rise in power prices. 

The government, however, assured the beleaguered consumers that there would be no need to raise electricity tariff further even if the expensive imported LNG (liquefied natural gas) is supplied to the power plants from next year as the operational dual fuel plants would run on imported gas instead of imported oil. Domestic gas price will then be fixed after blending the imported LNG costs with the existing tariff. However, if the government reduces the oil price, electricity tariff would come down, says the regulatory authority.

It is, however, the responsibility of the authorities to fix and readjust the prices of liquid fuel and electricity. But the energy and mineral resources ministry fixes the price of liquid fuel only. As such, adjusting power tariffs based on fuel price fixed by the ministry is unfair and illogical.

In the circumstances, the BPDB should lay emphasis on combined cycle power plants as well as re-powering of electricity plants to produce more power with less energy. The government has waived all tax and value added tax (VAT) on import of furnace oil for all private and public power plants. The power tariff is bound to go down significantly even if the BPDB imports furnace oil through commercial importers and generate electricity from the fuel.

One wonders why the government is lacking in initiatives and drive to raise the efficiency of the power distribution companies. No steps have so far been taken to cut the system losses of such entities. No long-term steps have been taken to reduce the cost of electricity generation.

In a way, the government appears to have been passing the burden of price hikes on to consumers once for all, whose protests have so far fallen to deaf ear.

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