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The financial loss of the state-owned Bangladesh Power Development Board (BPDB) is likely to cross Tk 540 billion in the current fiscal after the hike in the price of gas increased their input cost. In 2021-22 its losses were Tk 299.15 billion, reports UNB.

“We have to count Tk 100 billion extra cost to pay the gas bills following the new gas price enhancement,” a top official of the BPDB told the news agency.

He said the new cost of gas purchase was already communicated to the Power Division which had already raised the issue at a high level meeting at the Prime Minister’s Office (PMO) seeking further instruction.

The government on 18 January raised the retail gas prices for public, private and captive power plants and also for industries and commercial users with effect from 1 February.

As per the new government announcement, the gas prices have been increased by almost three times for public and private power plants while almost double for captive power plants and industries, and significantly hiked for commercial users.

However, prices for household consumers, CNG-run for motor vehicles and tea estates were kept unchanged. 

The Energy and Mineral Resources Division set the prices through a gazette notification issued on Wednesday applying the new amendment to the Bangladesh Energy Regulatory Commission (BERC) Act, which empowered the government to set all kinds of energy prices bypassing the regulator’s jurisdictions at any time.

As per the gazette notification, the public and private power plants including the IPP and rental power plants will pay gas price at Tk 14 per unit (each cubic metre) instead of previous price of Tk 5.02. The rise is 179 per cent.

The captive power plants, small power plants and commercial power plants will pay Tk 30 per unit instead of the previous price of Tk 16 which is an 88 per cent rise.

It means after the current enhancement in gas price, the loss in the space of one fiscal will go up by over Tk 240 billion, said the sources at the BPDB - an almost 80 per cent jump.

According to BPDB’s own latest estimates, the financial loss was supposed to cross Tk 48o billion in the 2022-23 fiscal from Tk 299.15 billion in the fiscal year 2021-22. But after the hike in bulk power tariff, the loss was calculated to come down by about Tk 40 billion to Tk 440 billion.

“But now the loss will go up by Tk 100 billion due to the gas price hike effective from 1 February,” said the official referring to their latest assessment.

The directorate of finance of BPDB prepared this calculation on the basis of an audited report, official sources said.

On 21 November, the bulk power tariff was raised by about 19.92 percent – to Tk 6.20 per kilowatt hour (each unit) from the previous Tk 5.17 – with effect from December 2022.

As per the calculation, the loss has shot up excessively mainly for the two reasons — primary fuel price escalation and devaluation of the local currency.

"Among the two, the devaluation of local currency emerged as the major reason," a top official of the BPDB told the news agency.

He informed that the BPDB was going to incur a loss of about Tk 100 billion solely due to the high rate of dollar. Earlier, the US dollar exchange rate was calculated at Tk 85 which is now at Tk 107 which means the cost increased by Tk 22 per dollar.

The BPDB has to pay about $9 billion annually to buy electricity from private sector plants, to pay capacity charges and also to import other materials from abroad for its own purposes.  

The BPDB has a power purchase agreement with a huge number of private power generation companies to buy their electricity.

Available statistics reveal, currently, the country’s installed power generation capacity is over 25,500 MW and more than 50 percent of electricity is generated by the private sector through independent power producers, rental and quick rental power plants.

Import of electricity from India is also counted as private sector generation.

The private sector operators mainly use furnace oil, natural gas and diesel. Of these, 4,700 MW is generated by using furnace oil.