PDB seeks 14.5pc retail tariff hike

Amid sharp criticism from consumer rights groups, business leaders and politicians, the state-owned Bangladesh Power Development Board (BPDB) yesterday sought a 14.5 percent increase in retail tariff of electricity.

During the first phase of a 7-day hearing organised by the Bangladesh Energy Regulatory Commission (BERC) in the capital, the BPDB justified its proposal by saying that its distribution cost is higher than its selling price.

Aside from retail tariff, the BPDB has also proposed to increase the amount of security deposit, demand charge and service charge.

According to the BPDB, it has been facing a deficit of Tk 0.21 per unit (kilowatt-hour) as its distribution cost since 2015-16 has been Tk 6.95 per unit as opposed to the selling price of Tk 6.73 for each unit.

Considering this deficit, the BPDB has proposed to raise the retail tariff of each unit to Tk 7.71.

Following an evaluation of the proposal, the BERC technical committee said the retail tariff for BPDB customers could rise by 10.65 percent.

The DPDC, in its effort to meet the rising demand of power, has been increasingly reliant on expensive liquid fuel power generation, resulting in the rise in its production cost.

They have proposed to increase the bulk rate of power to cope with the mounting production cost, it said during the hearing. 

Under the proposal, bulk power tariff would increase by 14.78 percent and the unit price would be raised to Tk 5.59 from the present rate of Tk 4.87. 

The DPDB also proposed introduction of separate rates for multi-storied residential buildings and buildings run by associations, discount for prepaid metering, and a tariff structure for battery-run vehicles.

The proposal sought to raise security deposits for household types to Tk 600 from Tk 375 at present; agriculture, cottage industries, non-residential and commercial types to Tk 1,000 from Tk 600; and medium and heavy industries types to Tk 1,400 from Tk 600.  

The BERC technical committee advised restructuring and revising of the minimum charge, security deposit, demand charge and service charge to ensure a uniform price structure for all power distributors in the country.

It also said there should not be any security deposit for prepaid meter users. 

Tariff rate for battery-run vehicles that ply mostly in rural and semi-urban areas could be grouped under the category of street lights and water pumps, it observed.

Prof Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, hoped that the BERC would first settle the dispute over bulk rates before making a decision on retail rates.

He said more power should be supplied to rural areas, especially in the evenings, as less power is consumed there during the daytime as opposed to that in urban areas. 

Ruhin Hossain Prince, a member of Communist Party of Bangladesh, strongly opposed the price increase proposal for demand charge. “Increasing the demand charge would not be wise as adequate electricity is not being supplied.”

Zonayed Saki, chief coordinator of Gono Shanghati Andolon, said, “Since the economy is under strain now due to floods, there's no logic in raising the power tariff at the moment. Any increase in power tariff will have a negative impact on the economy.”

He also said the government's finance ministry should have sent their representative at the hearing. “There's no point in wasting time if [such hearing] is only symbolic to the government.”

In a statement on Sunday, Dhaka Chamber of Commerce and Industry (DCCI) said power price for industrial and commercial customers is already 180 percent higher than its generation cost. So, the DPDC's claim of raising tariff at all levels to cover losses is unjustified.   

The DCCI in the statement said almost all power-intensive manufacturing industries will be adversely affected due to the proposed tariff hike. Especially small and medium enterprises, steel re-rolling mills, and textile sector will see an average of 8 to 10 percent rise in production cost.

“It will affect the low-cost industrial productivity strength of Bangladesh. It will also impede massive infrastructure development work, export competiveness and increase the cost of doing business, which may hurt the incremental growth of SMEs as well as local and foreign investment.”

Above all, the tariff hike will inflate the cost of living for common people across the country, according to the chamber.

Zahir Chowdhury, vice chairman of Bangladesh Steel Re-rolling Mills Association, said electricity consumption makes up 15 percent of the sector's cost. “The electricity tariff has great significance for us. So, the government should lower the tariff.”

Sajib Hossain, a representative of Bangladesh Knitwear Manufacturers and Exporters Association, said if power tariff goes up, it will increase the cost of doing business and hurt the export potential of the sector.

The rise in the cost of doing business will cause closing down of factories and thus risking the livelihoods of thousands of workers, he added.

BERC Chairman Monowar Islam, who presided over the hearing, backed the proposal incorporating battery-run vehicles in the tariff plan. “The world is increasingly moving towards electric vehicles. So we are taking this into consideration.”

The BERC will have to announce its decision within 90 working days of the power tariff public hearings that conclude on October 4.

Over the last eight years, retail power tariff was increased seven times -- the last occasion being in September 2015.

According to the annual report of the Power Division for the year 2015-16, the BPDB catered to 34.57 lakh customers, amounting to 15.87 percent in the country.