Thursday 18, August 2022

Hike electricity price by 56pc

Recommends technical panel of energy regulatory commission; people in for more sufferings

Time Digital Report: The technical evaluation committee of the Bangladesh Energy Regulatory Commission yesterday recommended increasing the electricity price by 56 percent.

Business leaders and consumer rights associations said such a major hike in power prices would not only affect the prices of daily essentials but also hurt exports and industrial production.

The committee made the recommendation at a public hearing at the capital's Biam Auditorium on a BPDP proposal to increase the power tariff.

If the recommendation is accepted, the Bangladesh Power Development Board (BPDB), which buys electricity from the power plants, will sell 1kWh of electricity to the distributors for Tk 8.16, up from the current Tk 5.17.

At the hearing, the BPDP said electricity generation cost Tk 8,180 crore more in the 2020-21 fiscal years, compared to the previous one, because the plants were using furnace oil amid the shortage of gas, which is cheaper.

The BPDB representative said it has a deficit of Tk 30,251 crore in its annual budget because of the withdrawal of 6 percent tax relief from furnace oil in June, imposition of new VAT, and taxes on oil, and 5 percent VAT on imported coal.

In his counterargument, Prof M Shamsul Alam, senior vice president of the Consumers' Association of Bangladesh, said the government was making the energy and power sector a commercial one and considering it as the main source of collecting revenues.

The prominent energy expert said the BPDB could address its deficit without putting the burden on the general public.

Withdrawing the newly imposed taxes on furnace oil and coal, reinstating the tax relief for fuel, and importing fuel directly through Bangladesh Petroleum Corporation (BPC), could save the government at least Tk 8,833 crore in a year, said Prof Alam.

The BPC set the fuel, i.e. furnace oil, prices on its own, he said, adding that it was illegal and illogical.

By withdrawing the BPC's recent price hike and reducing the dependency on the expensive quick rental plants, the government could save another Tk 14,238 crore, he said, adding that increasing the power prices was not necessary at all.

Later in the day, Mostofa Azad Chowdhury, senior vice president of the Federation of Bangladesh Chambers of Commerce & Industries, said the Covid pandemic and Russia-Ukraine were already making the import of raw materials more difficult and raising production costs. "That's why it's become harder to survive the competition. The prices of essentials have risen. People are worried about the future. Their savings are depleting, which may affect investments. If the electricity prices rise, the economy, agriculture, industries, production, and service sector will be affected."

Nihad Kabir, former president of the Metropolitan Chamber of Commerce and Industry (MCCI), said people were already facing inflation and the government should avoid raising electricity prices by providing subsidies.

"We need mid and long-term plans to raise the price step by step over 10-15 years," she said.

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