Power tariff hike raises monthly expenditure of a family by 9.50pc: CPD

Centre for Policy Dialogue (CPD), the country’s leading think tank, revealed in a study that the latest power tariff hike increased the average monthly expenditure of a family by around 9.50 per cent.

The tariff hike also increased the cost by 9.12 per cent for small industries, 9.71 per cent for businesses and offices, 10 per cent for industries and 1.20 per cent for irrigation, the CPD study pointed out.

The commoners are bearing the brunt of high expenditures due to the government’s erroneous policy-making, which is fueling inflation, it pointed out, adding the government is raising tariffs instead of going for alternatives.

CPD disclosed these in a media briefing titled ‘Recent Electricity Price Hike: Isn't There a Better Alternative for Subsidy Adjustment?’ at its office in the capital on Wednesday. 

CPD research director Dr Khondaker Golam Moazzem delivered a presentation at the event. He opined that phasing out of fossil fuel-based power plants in time and implementing ‘no electricity, no payment’ system is necessary to check the soaring power costs.

Replacing fossil fuel-based power plants with the renewable energy ones by the entire capacity is also necessary, he added.

If the fossil fuel-based power plants are phased out in time and ‘no electricity no payment’ could be ensured for all the plants, CPD’s calculation estimates that by 2028-29, not only the subsidy will be zero, but also there will be a positive surplus for state-run Bangladesh Power Development Board (BPDB).

The CPD revealed that only a 6.80 per cent rise in tariff over five years is enough to reach a zero subsidy scenario, which is far below the International Monetary Fund’s (IMF’s) estimation of raising it by 12 per cent over the next five years for reaching a zero-subsidy scenario.

The CPD also opined that the amendment of the Bangladesh Energy Regulatory Commission (BERC) Act has weakened the institutional framework of electricity pricing by eliminating the process of public hearings and involvement in the price revision process. This amendment has questioned the transparency and accountability of the regulatory process, the CPD opined.

The average expenditure increase for the majority consumer base is more than the overall average increase of the electricity tariff, it noted. Mr Moazzem opined that the increase in capacity has outpaced the growth in electricity consumption significantly. Although the capacity has surged by double digits consumption saw only a single-digit growth, he noted. This disparity has been widening since 2018, posing a significant challenge with capacity payments becoming a major concern for the government, he added.

During the fiscal year 2022-23, the government provided Tk 395 billion as subsidies for electricity, which is almost similar to the capacity payments of the BPDB to power companies, he added.

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