BERC recommends hiking retail power tariff by 15.43%

The technical evaluation committee of the Bangladesh Energy Regulatory Commission (BERC) has recommended raising retail electricity price by 15.43%. 

The recommendation was made following the proposals submitted by six state-owned power distribution entities to raise about 20% power tariff at the retail level.

A day-long public hearing was held in this regard at the BIAM Auditorium in Dhaka on Sunday (8 January).

Meanwhile, Dhaka Mass Transit Company Ltd (DMTCL) and the high-tech park authorities of the country have demanded affordable power supply from distributors.

All the six state-owned power distribution bodies which submitted their respective proposals on raising retail power tariff in subsequent of the bulk power tariff hike are—Bangladesh Power Development Board (BPDB), Bangladesh Rural Electrification Board (BREB), Dhaka Power Distribution Company Limited (DPDC), Dhaka Electric Supply Company Limited (Desco), Northern Electricity Supply Company PLS (Nesco), West Zone Power Distribution Company Limited (WZPDCL).

They have placed almost an identical proposal to raise retail power tariff by about 20%.

They moved to submit their proposals following the BERC's decision to hike the bulk power tariff by 19.92% with effect from 1 December.

As per the latest statistics, the financial loss of state-owned Bangladesh Power Development Board (BPDB), the principal organisation in power sector and also the single buyer of electricity from private sector power plants, is likely to increase by Tk18,094 crore in one year.

According to BPDB's own latest estimates, the financial loss will cross Tk48,000 crore in the 2022-23 fiscal from Tk29,915 crore in the fiscal year 2021-22, an increase of almost 67%.

Sources said the BPDB's revenue deficit has further increased due to its purchase of electricity at higher price and sale at lower price, the hike in petroleum fuel prices and also the price escalation of US dollars.

Officials said the recent 19.92% hike in the bulk tariff may help the BPDB to reduce its loss by only Tk5,000 crore while a huge revenue deficit will remain a big burden.

On the other hand, the bulk power tariff hike puts pressure on power distribution companies to submit their retail tariff hike proposal to the BERC to cover their own revenue gaps.

The retail power tariff was last raised in March, 2020 by BERC after holding a public hearing.

Through an announcement, the BERC had raised the power tariff on a weighted average by 5.3% at retail level with effect from 1 March, 2020.

As per that decision, the retail power tariff was increased from Tk6.77 to Tk7.13 per unit (each kilowatt-hour).

Officials said the Power Division is under tremendous pressure from the Finance Ministry to raise power tariff in bulk and retail to cover its huge financial losses.

The recent commitment of the International Monetary Fund (IMF) to provide a $4.5 billion loan has increased the pressure as the donor agency has tagged a condition to decrease subsidy in the power sector and raise power tariff to cover the losses, said a Power Division official.