Energy price hike to ease people's burden | The Daily Star
12:00 AM, November 17, 2011 / LAST MODIFIED: 12:00 AM, November 17, 2011

Govt Handout

Energy price hike to ease people's burden

The upward adjustment of energy prices will ultimately minimise the burden of increasing subsidy on the people as the expenditure comes from public coffer, said an official handout yesterday.
Since the subsidy is being managed through imposing taxes on people, burden of taxes on the people increases with the rise in subsidy expenditure. "Because subsidy does not come from any foreign sources as grants rather it is collected from our own internal sources and loans," it said.
The present government adjusted the fuel oil prices upward three times in the last three years. It has increased the fuel oil prices by Taka five on an average on November 10 to minimise losses it has been incurring due to a rise in prices of fuel in the international markets, the government handout said.
Power Development Board (PDB) and power distribution organisations face huge loses if the tariffs are not adjusted timely, it said.
The country's electricity demand rises from 8 to 10 percent annually and PDB's average cost for the supply of per unit power was Tk 2.62 in 2009-10 which increased to Tk 4.15 in 2010-2011. When fuel-fired power units will generate 500MW electricity in 2011-12, the per unit power supply cost will stand at Tk 4.86.
"Rising furnace oil price in the international market, increasing use of fuel for power generation and power purchase from private producers are pushing up the cost of power generation," the handout said.
Subsidy expenditure is increasing due mainly to a rise in fuel prices in the international market. For power sector, subsidy expenditure varied between Tk 500 crore and Tk 1,000 crore from 2002 to 2008 but it has stood at Tk 10,000 crore in 2011 against the current budget's allocation of Tk 5,200 crore. Bangladesh Petroleum Corporation will face a loss of Tk 17,000 crore in 2011-12.
The PDB has taken steps to construct new power plants and purchase of electricity from rental power plants and independent power producers to meet emergency demand. It has also taken a year-wise plan to increase generation capacity to 11,000 MW by 2015.
If consumers do not pay a rational price for the use of electricity, the government has to adjust the price through providing subsidy, it said.
“Thus, people are subjected to dual injustices: (1) the gap between the actual power production cost and tariff the customers are paying is being met through subsidy. Due to limited state resources and income, the government cuts allocations from the priority sectors for collecting fund for the subsidy. As a result, beneficiaries from those priority sectors are deprived of their due facilities, (2) when the government meets subsidy expenditure from the public exchequer; it actually takes such financial support from the reserved fund of the people. It means, 48 percent people are enjoying electricity at the taxes paid by 52 percent people who are not getting such facilities.”

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