Power Division hikes retail electricity price by 5%

Consumers, already embattled due to record commodity prices following a historic liquid fuel price hike, are now set for another battering as the government announced a 5% increase in electricity prices to Tk7.48 per kilowatt hour at the retail level.

This was the first time the government used its newly-granted authority to adjust the price of electricity without needing a public hearing by the BERC.

The new electricity price will be effective from January, meaning the consumers will have to pay the additional bill for the electricity used in the running month, reads a gazette issued on Thursday.

The previous price was Tk7.13kWh.

The 5% hike is expected to net an additional sum of around Tk3,000 crore annually.

The Power Division of the Ministry of Power Energy and Mineral Resources announced the new price using the recent ordinance that amended the Bangladesh Energy Regulatory Commission (BERC) Act, paving the way for the ministry to adjust the prices of gas and electricity without holding a public hearing.

The ordinance was issued by President Abdul Hamid on 1 December last year.

In a press release, Minister of State for Electricity, Energy and Mineral Resources Nasrul Hamid said considering the global situation, the price of electricity was increased by 5% to adjust the subsidy.

He said due to the shortage of natural gas in the country, the widespread use of imported liquefied gas, the increase in the price of fuel oil in the international market, and the devaluation of taka, the BERC on 21 November 2022 increased the cost of electricity at the wholesale level by about 20%.

Distribution companies applied for at least a 15.43% increase in retail/consumer level electricity prices to cover their financial loss against the 20% price increase at the wholesale level.

Considering the overall financial condition of the country, electricity prices were revised at the request of distribution companies, he said.

Besides, the Power Division also increased the demand charge from Tk5 to Tk15 for different consumer classes.

The new price comes after a recommendation of the BERC's technical evaluation committee to increase the retail electricity price by 15.43%.

The recommendation is pending with the energy regulatory commission, which was supposed to issue an order to this end by the end of this month.

Previously, the Ministry of Power, Energy and Mineral Resources adjusted fuel oil prices, including diesel, octane, kerosene and petrol, without any hearings. Still, the BERC changed gas and electricity prices through hearings.

With the amendment of the BERC Act, the power ministry will no longer be required to hold a hearing to decide new prices for gas and electricity.

Energy expert and a professor of the Department of Petroleum and Mineral Resources Engineering of the Bangladesh University of Engineering and Technology (Buet) Dr Mohammad Tamim said with this gazette; the government has taken away the role of BERC in energy price regulation.

"This administrative order will make the companies more inefficient and less accountable. Because, if this practice continues then consumers won't know anything about the process of how the government sets the price," he said.

"Now, price regulation power of the energy has gone to those who supply the energy," he added.

Dr Mohammad Tamim said the Power Division could implement its plan through BERC, leaving the pricing to the regulator.

"However, I think the latest hiked price won't have an impact on the price of the commodity and the government should ensure that," he said. 

Earlier on 8 January, the technical evaluation committee of BERC recommended around 15% retail electricity price hike at a public hearing against power distribution companies' proposal to increase the price on an average by 20%.

At the hearing, BERC Chairman Abdul Jalil said the current commission's term will expire on 30 January and a decision regarding the tariff hike must come by then.

The BERC announced the last electricity price hike at retail level in February 2020.