Another price hike in the offing

Another massive loss in the power sector in the region of Tk 80 billion is leading speculations of a hike in power rates. Once again the very method of quick power through fast tracked rental units is the cause. Their charges are higher than that offered to the consumers and it was always going to be a losing battle for consumers. Gas fired plants could have kept matters in better check but that’s in short supply. The five per cent duty on coal means another ingredient costing more and the final dependency on LPG means costly imports.

There is an inexplicable tendency towards utilising coal whereas India has shut down coal units and found incredible solutions in solar power. Truth be told Bangladesh hasn’t treated solar energy with the enthusiasm expected. Nor has it invited international firms to provide solar solutions, the cost of which continues to drop in India. True, the technology is new and requires investment but given the ambitious targets of power generation, cheaper alternatives have to be explored if economies of scale and a light in every home are to be achieved.

Solar energy will further lower the carbon emissions thereby increasing Bangladesh’s leverage in overall climate change negotiations in carbon trading. While coal extraction is yet to be optimised, a decision needs to be taken over the carbon footprint it will create. Also to be considered is the pollution that coal usage will inevitably produce. Studies are required sooner than later. In the meantime the joke of symbolic solar system on multi-storey residential complexes must stop. Sri Lanka has joined the party in not providing electricity unless a percentage is produced at homes through solar panels.

The instability in international oil prices means that LPG and LNG prices will be unstable and therefore cannot be relied upon for the private quick rentals. The further increase in power tariffs expected as early as in the new year will stoke further inflation and have a spillover effect on the overall cost of living. Such costs will negate whatever pay rises are provided in the public sector and provoked in the private sector. If pay rises do not allow for savings the economy can’t be expanded as is being seen of late by the growing reluctance of the private sector to take loans from banks and invest.

There are also limits on how much urban areas can be taxed to provide electricity at cheap rates by the Rural Electrification Board. As it is the taxman has failed to expand its network towards the suburban areas. Any concept of subsidising electricity in the same areas cannot continue indefinitely. Power will be required for the one hundred economic zones and subsidies there at the expense of a struggling middle class won’t pay in the long run. The Power Development Board has submitted its case to the regulatory commission. What it waits for is the government’s decision on either subsidies or hikes.