Consumers must not pay the price
CPD suggests cutting production costs, mismanagement to reduce subsidies
Centre for Policy Dialogue today urged the government to reduce the cost of electricity production instead of burdening people with increased tariffs to cut subsidies in the sector.
CPD also urged the authorities to look for alternatives to cut the subsidies as the increased price of power generation is a result of faulty systems, wrong policy, and overcapacity.
The call came at a press briefing yesterday as CPD unveiled a study titled "Recent Electricity Tariff Hike: Isn't there a better alternative for subsidy adjustment?".
Amid a price hike of daily essentials, the government's decision to adjust the electricity price further will add to people's woes, it added.
On March 29, the government increased the average power tariff from Tk 8.25 to Tk 8.95 per kilowatt-hour.
"With the price hike, the subsidy reduction would be around Tk 2,650 crore. If the government wants to reduce the subsidy to zero, the tariff would have to be Tk 16.41," said Dr Khondaker Golam Moazzem, research director of CPD.
At present, the average cost of power generation is Tk 11.33, almost double the figure in 2020, according to the PDB annual report.
Bangladesh Power Development Board has been incurring losses mainly due to an increase in operating expenses driven by diesel or furnace oil used for power generation in rentals and quick rentals alongside a significant amount in capacity payment to independent power producers, he said.
Despite increasing electricity prices from January to March last year, the PDB reported Tk 43,539 crore in losses in the last fiscal while the government provided Tk 39,534 crore in subsidies, CPD said.
In order to reduce the subsidy burden without increasing electricity price, CPD proposed phasing out fossil fuel-based power plants and replacing those with renewable energy plants, and introducing "No Electricity No Payment" programme, meaning no payment to power plants that are sitting idle.