Gas tariff hike: Yearly electricity generation costs may rise to Tk 18b

Electricity generation costs in gas-fired power plants might increase annually to around Tk 17.75 billion due to the latest tariff hike in gas prices alone, if the current level of consumption continues.

The country currently has a total of 132 power plants that supply electricity to the national grid for consumption by all types of clients, of which over half are gas-fired.

According to Petrobangla, the gas-fired power plants consumed around 1.30 billion cubic feet per day (Bcf/d) of natural gas as on June 30, the day before the start of the fiscal year 2019-20.

The new gas tariff became effective on July 01.

Total Gas bill against electricity generation in the gas-fired power plants was Tk 97.52 million on June 30, according to state-run Bangladesh Power Development Board (BPDB).

With the latest 40.82 per cent gas tariff hike in power plants, the gas bill rose to Tk 137.32 million.

According to Bangladesh Energy Regulatory Commission (BERC) statistics, total electricity generation expenditure, including fuel costs, for gas-fired power plants last year was around Tk 140 billion.

Despite the rise in electricity generation costs, it would not require hiking power tariff, a senior official of the power division under the Ministry of Power, Energy and Mineral Resources told the FE.

He said some dual fuel power plants, which were running on costlier diesel, would run on natural gas.

This would help bring down the costs.

Besides, the government would not extend the tenure of the expensive oil-fired power plants further to reduce the costs, he said.

BERC chairman Monowar Islam at the press conference echoed the same, saying the Commission might not need to increase power tariffs if the BPDB operates gas-and diesel-run power plants in sync.

The gas-fired power plants would require to be operated longer than diesel-run ones, he added.

But rights groups and energy experts were not convinced as they said the issue of not raising power tariff 'now' was nothing but to 'appease' the aggrieved people.

During the power tariff hike around a decade back when oil-fired plants were operational, the Power Division had pledged to educe electricity tariff after several years but it never happened, said energy adviser of the Consumers Association of Bangladesh (CAB) Professor M Shamsul Alam.

On the contrary, power tariff was raised several times after that with the last hike in November 2017, he said.

Member secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, Professor Anu Muhammad questioned the domestic gas tariff hike at a time when gas price in the international market is on the decline.

A strong lobby backed by the beneficiary business group of power energy sector was behind it, he said, adding the BERC has turned to a 'ploy' to materialise their agenda and arrange fund for them, he alleged.

Mr Muhammad also smelled rat in Petrobangla's purchase of LNG from the international market, saying it was buying the fuel at 40 per cent higher rate than the current LNG price in the international market.

"I am not convinced about the plan of cost reduction by keeping the expensive oil-fired power plants idle or by diverting them to gas-fired power ones," he said.

"If such was the plan, why did the Power Division allow the construction of five new diesel-fired power plants totalling the generation capacity of 800 MW last year just before the commencement of LNG import?," he questioned.

These diesel-fired power plants would not retire before 2023, he added.

Besides, the BPDB would have to count huge quantity of money as capacity payments to the owners of expensive oil-fired power plants keeping their plants idle, thus clearing the ways for electricity generation in gas-fired power plants.

If the power tariff is not raised, the government would have to provide increased amount of money to the BPDB as subsidy and the question is how long it could shoulder it, he added.

On June 30, the BERC announced the biggest ever hike in domestic gas prices by an average 32.8 per cent with effect from the day one of the new fiscal year.

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