The Financial Express

BPDB seeks rise in bulk power tariff or subsidy

CAB urges govt to curb corruption to cut loss

| Updated: October 24, 2019 12:43:46

Picture used for illustrative purpose only Picture used for illustrative purpose only

The BPDB in a proposal submitted to the Bangladesh Energy Regulatory Commission (BERC) requested for regulator's initiative to arrange subsidy if the latter was unwilling to allow any tariff hike, a senior official told the FE on Tuesday.

The BPDB for the first time placed before the BERC two options -- tariff hike or subsidy -- to lessen its loss.

On previous occasions, the BPDB had only sought hike in electricity tariff, and the BERC either hiked tariff or instructed the government to provide subsidy, he said.

The BPDB will have a revenue shortfall worth Tk 86.08 billion in the current fiscal year, 2019-20, if the tariff is not hiked, the entity stated in its proposal to the BERC.

It will require around Tk 452.08 billion to purchase electricity from the power plants as well as to produce electricity from its own plants.

The Board will get around Tk 366 billion by selling electricity to bulk consumers at the existing rate, it stated. Currently, the per unit bulk tariff (1 kilowatt hour) electricity is Tk 4.87.

The board in its proposal argued that the latest hike in tariff of natural gas pushed up electricity generation cost from the gas-fired power plants by around 41 per cent.

The BERC last raised retail electricity tariff in November 2017. The bulk electricity tariff was last raised by the commission in August 2015.

When contacted, energy advisor of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam urged the government to check corruption, and thus contain illogical increase in electricity generation cost.

"A significant volume of electricity generation capacity has been kept unused, resulting in higher capacity payments to the power plant owners."

A good number of high-cost rental and quick rental as well as oil-fired power plants are still operational.

Instead of retiring the expensive oil-fired power plants, the Power Division under the Ministry of Power, Energy and Mineral Resources extended their tenures, he noted.

"Most of the power purchase deals were unsolicited in the name of increasing electricity generation capacity."

Prof Alam opined that if corruption is checked and illogical costs are cut, the BPDB will not require hike in power tariff at bulk level.

Besides, it might be an extra burden to the retail-level consumers, as the state-run electricity distribution companies may also seek hike in retail electricity tariff as the consequence of bulk-level tariff hike, he added.

Any hike in bulk electricity tariff will increase electricity purchase costs of the state-run electricity distribution companies, including the Rural Electrification Board (REB), the Dhaka Power Distribution Company (DPDC), the Dhaka Electric Supply Company (DESCO), the West-Zone Power Distribution Company (WZPDC), and the North-West Zone Power Distribution Company (NWPZC).

All these companies buy electricity at bulk rate from the BPDB to sell to consumers.



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