There was no need for the government to take over the authority to increase electricity rates from the Bangladesh Energy Regulatory Commission (BERC). This has been done in context of the regular adjustment of rates. But BERC has been adjusting prices of Liquid Petroleum Gas (LPG) every month. It could do the same in the case of electricity too. This would be possible if the government fixed a subsidy in this regard.
It can take a month to adjust the price of electricity and gas. That is not too long. Nowhere in the world are electricity rates adjusted every month. Adjustments are made as the situation demands. The power sector remains more or less stable. The process of BERC's price increase also creates confidence in the government. According to a study, consumers accept increases in price if these are justified. But if prices suddenly shoot up, consumers lose their confidence. This indicates a lack of transparency.
After the government amended the law and took over the authority to increase rates, BERC held a public hearing. This gave hope. It seemed to indicate that the government would not use its authority to raise rates unless in an emergency.
No rule was followed in increasing the price by means of executive order. There is no longer any transparency in determining the rates in this sector. If there is a public hearing, questions can be raised. Corruption, irregularities and inefficiencies of the company come to the fore
The price of electricity was hiked by means of an executive order. The power sector never faces a situation where the price of electricity has to be increased in a matter of three days. If the government wanted, it could have raised the price three days later through BERC. This would boost trust in the government. There was no need for an executive order. There is no justified reason behind this. This may have been done upon advice of a certain quarter. The commission has nothing to do now. Their authority has been curbed.
No rule was followed in increasing the price by means of executive order. There is no longer any transparency in determining the rates in this sector. If there is a public hearing, questions can be raised. Corruption, irregularities and inefficiencies of the company come to the fore. Earlier, Petrobangla had released inflated figures on LNG import in order to raise the price of gas. That was caught out in the public hearing. In the case of BERC hearings, the time can be shortened, but it should not be sidestepped. Increasing prices by executive order may create a monopoly in the market. The company can then extract excessive profits. Incompetence increases. That is why it the hike in the price of electricity should certainly have been carried out by means of BERC.
The five per cent increase in power tariff should hardly have much impact on the market. However, it is mostly likely that prices of everything will be increased. There is the propensity to raise prices by ten taka if the power of electricity is raised by five taka. If the price of fuel goes up by 15 per cent, transport fare shoots up by 50 per cent. And so the prices of commodities go up too. That is why it is imperative to control inflation. The government must firmly control the prices of commodities in the market.
* M Tamim was special assistant for energy to the former caretaker government
** The op-ed is originally published in the print and online edition of Prothom Alo and has been rewritten for English edition by Ayesha Kabir