Power tariff to rise by 34-70 paisa per unit from March: State minister

State minister for the ministry of power, energy, and mineral resources of Bangladesh Nasrul HamidFile photo

State minister for power, energy and mineral resources Nasrul Hamid has said the retail power tariff is likely to increase by 34-70 paisa per unit from March.

Nasrul Hamid disclosed the revised power tariff while speaking to journalists at the secretariat on Tuesday.

He said electricity is sold at a lower price than production cost. Power prices are being adjusted to meet the deficit and thus prices will be adjusted over the next three years in phases.

The state minister, however, is reluctant to call it a tariff hike. He said if they had charged more than the cost, it could have been called a tariff hike. Since the deficit is huge, the price is being adjusted, and that is also very low.

Nasrul Hamid said the exchange rate of the US dollar was estimated at Tk 70-80 a dollar while setting up the coal-fired power station, but the dollar price increased by Tk 40 per dollar. As a result, power production costs increased immensely. Besides, power tariff is adjusted based on fuel costs across the world.

The government has opted out of the costly rent-based quick rental systems and diesel-based power stations, Nasrul Hamid said, adding that a big power plant is coming and 2,000 megawatts of solar electricity will be added in two years.

The state minister said the present price adjustment is because of dollar prices, as well as to come out of subsidy gradually.

Currently, the capacity of electricity generation in the country is 26,000 MW, but power generation reaches 13,000-15,000 MW in summer and 8,000-9,000 MW in winter. To date, the highest amount of electricity, 15,648 MW, was generated on 19 April 2023.

Whether a power station is in operation or not, rent for the plant has to be paid, which is known as a capacity charge. According to the Centre for Policy Dialogue (CPD), last year 41 per cent of the capacity remained idle. Last fiscal the Power Development Board (PDB) paid an additional amount of Tk 260 billion for quick rental power plants.

Experts said if higher capacity charges had not been paid, power stations could have been run at low cos.

If power stations had been set up through competitive tenders, the production costs would not have risen to such a level, and people would also get electricity at lower cost.

Now the government increases prices bypassing the Bangladesh Energy Regulatory Commission (BERC). As a result, issues on reduction of costs are not reviewed during public hearings.

Consumers Association of Bangladesh (CAB) senior vice-president M Shamsul Alam told Prothom Alo that Tk 300 billion has been plundered through expenditure in the power sector, and if that can be checked, there will be no need for raising power tariff.

Meanwhile, the state minister said prices of fuel oil will also be adjusted in the first week of March, and the government will opt for dynamic prices where prices will be adjusted with global price fluctuations.