The government has decided to increase electricity prices at the bulk and retail levels from March 01, according to a report published in the New Nation on Friday. Earlier in its previous term, the incumbent Awami League government had increased the electricity tariff six times. The latest was carried out on September 9 2012.
Meanwhile as we see the decision of rising electricity prices has already raised alarm at the consumers’ level. We know when the new rates will be implemented it will bring additional financial loads on households, small businesses and corporate users to add to their sufferings. Particularly households may be severely hit to cut expenditure on some other items such as education and medicine. The economy will face the renewed impact of inflation.
The report stated that Bangladesh Energy regulatory Authority (BERC) had already invited price hike proposals from distribution companies to start negotiations on the new tariff hike apparently within a band of 10 to 12 per cent. The government now buys electricity at a higher price from fuel-fired powered rental and quick rental plants. It then sells at lower cost and the gap is being met by a state subsidy. Despite six times price hike in the previous term, the government subsidy remained high at Tk 3,850 crore which was paid mostly to private sector producers. The Power Development Board (PDB) figures moreover, showed its net yearly loss stands at Tk. 7500 crore.
There is hardly any secret of the fact that ruling party men and business houses close to the power centers are using the power sector as the money minting ground by getting contracts without competitive tenders. The government has also offered an indemnity to those producers for getting unsolicited projects. Electricity users are finally paying for the highly remunerative business that power producers in the private sector have got over the past few years.
There is a common perception that the government should not increase the burden of electricity bills on users. Instead it must renegotiate further power tariff cuts with the rental and quick rental producers to bring down government losses. It should also reduce illegal connections and other waste and mismanagement in the distribution system in which power division engineers and employees are equally engaged.
We know that the government is under pressure from the World Bank, ADB and IMF to reduce the state subsidy to power plants but this does not mean that the end consumers should suffer for the high cost of producer and particularly for corruptions, inefficiency and mismanagement of the government.
