THE government will again raise power tariff as State Minister for Power and Energy Nasrul Hamid on Sunday said while addressing as chief guest at the General Managers’ Conference of the Rural Electrification Board (REB), as per a report of our daily. The move has disappointed people again.
As per the report he stated that REB should reduce corruption and curb system loss to save about Tk 600 crore annually. The junior minister did not give any detail of the government’s plan as to when and how it would raise the power tariff. In September last year, the government raised the gas price and power tariff by 2.93 percent and 26.29 percent respectively on average at the consumer level.
As per the present provision, if the government wants to raise power tariff and gas price, it has to submit a proposal to the Bangladesh Energy Regulatory Commission (BERC). After holding public hearing on the issue through a certain procedure, then the regulator would announce its decision.
Instead of continually increasing power tariffs and thus further overburdening the citizens the country could go for Integrated Resource Planning (IRP). Integrated Resource Planning requires addressing both supply side and demand side management for an efficient use of energy. Despite proven advantages of IRP over conventional power development plans, many countries like ours ignore IRP and pay a high price. Several US states and other countries have now made it law for utilities to follow IRP. As efficiency improvement reduces generation and hence utility revenue, it may encourage traditionalists to stick to an inefficient system. At the same time a MW added has a huge political mileage than a MW saved.
Because energy efficiency is such a low-cost resource, IRP mandates that all energy efficiency options through demand side management are exploited. This also reduces total resource costs for utilities and a pillar stone of any IRP. In many countries, this is a requirement as per the law. Unfortunately, the efficiency drive in both supply and demand side in Bangladesh has been missing. Only recently after the creation of SREDA, a serious study has been performed by JICA for the national energy efficiency and conservation plan (EE&C).
In the context of IRP if electricity demand forecast for Bangladesh is examined and all the efforts that are going on to meet that demand, it can be concluded that there is a huge knowledge gap in our planning. Bangladesh is also about to make the classical mistake of conventional planning.
If solid homework based on painstaking micro analysis for a bottom up demand forecast along with giving serious consideration to the much cheaper demand side EE&C initiatives is done, the government can save huge resources, ease price escalation of power tariff and avoid embarrassment. Instead of adding large power projects first and then optimising the transmission and distribution network, an integrated system optimisation must be conducted identifying the present load centres and future growth areas for a least cost system rather than just least cost generation.
A low income country like Bangladesh cannot afford the conventional power development plan and pay a high price. By doing an integrated resource planning we can ensure that the power sector does not overburden our citizens through us paying higher prices. This has an opportunity cost in terms of economic growth and results in high inflation.
