Price hike of fuel: Regulator’s mandate ignored

BERC's power

The Bangladesh Energy Regulatory Commission Act-2003 clearly states that only the commission, a statutory body for regulating the country's energy sector, can increase or adjust fuel prices.

But the sharp hike in fuel prices from August 6 was not done in accordance with the law; it was done through a circular issued by the power, energy and mineral resources ministry, energy experts said.

The sudden rise in fuel prices has hit people hard at a time when they were already reeling from skyrocketing prices of essentials.

"The increase in fuel prices is a violation of the law. Such a rise could be termed [a form of] plunder," said noted energy expert Prof Shamsul Alam.

"The officials involved with the hike are to blame here," he told The Daily Star.

According to Section 34 (1) of the BERC Act, notwithstanding anything contained in any other law for the time being in force, the price of power generation in wholesale, bulk and retail, and the supply of energy at the level of end-user, shall be determined in accordance with the policy and methodology made by the commission in consultation with the government.

Section 34 (4) further states that the commission shall "determine tariff after giving hearing to licencees and others who have interest in it". The punishment for violating the law as per Section 42 includes three years' imprisonment or a fine of Tk 5,000.

Prof Alam, also the vice-president of Consumers Association of Bangladesh (CAB), said top officials of the ministry were at fault as they had not included the provisions of the BERC Act in the file pertaining to the price hike.

"The officials concerned did not include the things we are now raising questions about in the file before sending it to the government for a decision."

Contacted, BERC Chairman Abdul Jalil said that as per the law, the cost of fuel will be determined by the commission.

He said that according to Section 34 of the act, the BERC in consultation with the government had formulated rules for enacting the law.

"We sent the rules to the [energy] ministry over 10 years ago, but the ministry neither took the law ministry's vetting nor did it send them to the government," he claimed.

"We have completed our task and the rest is lying with the ministry. Since the ministry is not doing it [accepting the rules], we cannot do anything about it. There is a lawsuit filed by the CAB over the matter. We have maintained in the court that we are always prepared to perform our legal duties," Jalil added.

Jyotirmoy Barua, a prominent Supreme Court lawyer, said the act clearly states that BERC is solely responsible for adjusting energy prices.

"But the commission has never fixed the price of any petroleum products. Before 2003, either BPC [Bangladesh Petroleum Corporation] or the ministry set oil prices through government orders. Ever since a specific law was enacted in 2003, all the orders that the ministry issued regarding the increase of the prices of any petroleum products can be deemed illegal. These are punishable offences," he said.

Barua said when an order with regard to raising the prices of petroleum was issued in November last year, CAB filed a writ petition saying that the ministry does not have the authority to increase the prices arbitrarily.

The BERC never wrote to the ministry asking for the rationale behind hiking the price, he said.

"Now, you can ask what difference does it make whether the BERC or the ministry sets the price since both are state organisations. The difference is fundamental. Since there is a law in effect, the government must comply with it. But the government apparently does not obey the law. This is the reality and is a crime as well," Barua said.

He said when the ministry sets the price, it leaves no scope for the public to give their input. When the hike is done through the BERC, however, the commission has to listen to stakeholders and arrange a public hearing before setting the prices -- a practice that was followed recently for adjusting gas prices.

"But when it comes from the ministry, they [the ministry] can increase the price however they see fit, and they don't need to explain it," he added.

On August 6, the day the hiked prices came into effect, when asked whether it was a violation, State Minister for Power, Energy and Mineral Resources Nasrul Hamid told this newspaper, "It's a violation of law if we consider it in one way. But another logic says it isn't.

"Since the market is now volatile, the prices needed to be increased several times. Now if we arrange a hearing every time before raising prices, it would create problems. There would be difficulties if we were to give a 90-day time before increasing the prices."