Another electricity price hike

It is surprising that a proposal has been sent to Bangladesh Energy Regulatory Commission to raise electricity tariff by Tk 0.30 per unit. The rationale given by the state minister for Power and Energy is that public sector power plants have to pay a higher price for petroleum than their private counterparts and hence this hike is necessary. This reasoning is not logical because the government can give a directive to change Bangladesh Petroleum Corporation's (BPC) policy of charging state-run power plants 9 percent commission, in the public interest.

It makes no sense for the BPC to be overcharging public power plants. In fact state-run power plants are having to pay the government rate for furnace oil, which is Tk 42 per litre. That is much higher than the price in the international market that stands at Tk 24 per litre, which privately-owned power plants are paying for their oil. Second we see little point of BPC charging import duties which merely inflates production costs. These are exploitative measures that may make perfect sense to BPC, but unfortunately drive up the costs for power plants which is ultimately passed on to consumers.

It is high time that the government takes steps so that furnace oil is supplied to power producing plants at the market rate to all oil-run power plants, state-owned or otherwise. Such a move would bring down cost of producing electricity by nearly 50 percent and the government can dispense with any price hike of electricity.