Staff Reporter :
Electricity consumers fear a 10 per cent tariff hike at retail level from July 1 as the National Board of Revenue is determined to realize 15 percent VAT instead of the existing 5 percent.
The energy regulator and the revenue board are at loggerheads over the ways of collecting 15 per cent value added tax (VAT) from electricity subscribers from the start of new fiscal year with the enforcement of new VAT law.
Officials said NBR wants the Power Division to include 15 per cent VAT in the retail electricity tariff of the consumers instead of showing it separately in the electricity bills.
At present, the NBR collects 5 per cent VAT on electricity tariff from retail level consumers under a separate head in the electricity bills, said a senior Power Division official.
The NBR recently wrote a letter to the Power Division to adjust the electricity tariff adding 15 per cent VAT to the bills, said the official.
State-owned power distribution companies would, however, be able to claim refund of the paid VAT under a relevant provision in the new VAT law, according to the NBR.
Currently, the Power Division pays 15 per cent VAT on purchase of inputs, including fuel, gas and coal, under the existing VAT Act 1991.
But neither the Power Division nor the NBR has the authority to change electricity tariff, a senior official of the Bangladesh Energy Regulatory Commission (BERC) said.
It is the BERC’s jurisdiction to bring any changes, if necessary, to the rates of electricity, he said.
To decide on the tariff changes, the BERC has to follow a certain process, which include placing of tariff hike proposal from electricity distribution companies, evaluating the proposals, holding of public hearings, post-hearing evaluation and pronouncing the final verdict, the BERC official added.
Besides, inclusion of VAT in the electricity tariff within a short span of time would not be an easy task for the distribution companies as the entire software system might have to be updated, a Power Development Board official said.
When contacted, Energy Adviser to the Consumers, Association of Bangladesh (CAB) Professor M Shamsul Alam protested the inclusion of VAT in electricity tariff terming it ‘anti-people’.
It would hold back the growth rate and increase public sufferings, he said.
The existing average retail electricity tariff is Tk 6.33 per unit (1 kilowatt-hour).
Electricity tariff for irrigation and farmers who use up to 50 units is Tk 3.33 per unit, while tariff for electricity consumption up to 75 units is Tk 3.80 per unit.
For consumption of electricity from 76-200 units, electricity tariff rate is Tk 5.14 per unit.
Tariff for electricity consumption between 201 and 300 units is Tk 5.36 per unit.
For electricity consumption between 301 units and 400 units, tariff rate is Tk 5.63 per unit. Tariff for electricity consumption between 401 and 600 units is Tk 8.70 per unit.
For consumption above 600 units, the tariff rate is Tk 9.98 per unit. Consumers are paying 5.0 per cent more as VAT over the aggregated monthly electricity bills.
