Retail power price: Hiked again, in just 3 weeks

Economists and energy experts said the Bangladesh government lacked a clear strategy for bringing subsidies to zero.

Asifur Rahman

Asifur Rahman

The Daily Star


February 1, 2023

DHAKA The government yesterday increased the electricity price once again by 5 percent at the retail level — the second hike in 19 days as it steadily retracts subsidies from the power sector while piling the burden on common people already struggling with inflation.

From today, the weighted average price of electricity will be Tk 7.82 per kilowatt hour, up from 7.13 kWh, according to the government circular.

That means a consumer who used to pay Tk 1,000 a month will now have to pay Tk 1,100 for consuming the same amount of electricity.

From now on, the government will adjust the electricity price every month, Nasrul Hamid, the state minister for power, energy and mineral resources, told The Daily Star.

“If the fuel prices in the international market have increased, we will increase the price. If not, we will not. We want to get rid of subsidy — that is the main goal,” he added.

The latest hike has left people in a state of confusion.

Take the case of Mahbubur Rahman, who works at a private company. He said he mistook the recent price hike with the increase on January 12.

“I could not believe that the government would hike the electricity price again so soon. It’s unbelievable. We have a limited income. How can it be possible to survive if they hike prices continuously,” he added.

Inflation averaged 8.76 percent in the first six months of the fiscal year, up from 5.7 percent a year earlier, according to data from the Bangladesh Bureau of Statistics.

Ahsan H Mansur, executive director of the Policy Research Institute, also mistook the recent price hike with the last one.

“Why are you saying that the government hiked the electricity price again? They just hiked the price some days ago. Isn’t it that price hike you are talking about?” Mansur questioned when the correspondent contacted him for comment.

Economists and energy experts said the government lacked a clear strategy for bringing subsidies to zero.

They were also critical about putting the price burden on the consumers instead of curbing corruption and illogical expenditure on the electricity production side.

“We are not seeing any strategy; rather they are hiking electricity prices by themselves. And why will all the burden be put on the consumers?” said Mansur, also the chairman of Brac Bank.

There are lots of ways to cut the government’s burden like decreasing system loss, sharing the burden with the power producers and so on.

“If the government hikes Tk 10 per unit, at least Tk 3 should be shared with the power producers. They have been getting capacity charges for years and now it’s time [for them] to share the burden too.”

He went on to advise the government to form a strategy by taking inputs from all stakeholders on how to reduce the subsidy.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, echoed Mansur’s view.

The government needs to bring changes in the expenditure structure to make it more efficient instead of passing on all the burden to consumers.

“There are questions about huge capacity payments to the private power plants, delays in phasing out rental and inefficient plants. But the government didn’t solve those problems, and hiked prices continuously,” he said, while urging the government to use the Bangladesh Energy Regulatory Commission to identify the loopholes in the system.

The government raised the price bypassing the public hearing of the BERC, a day after passing a law in parliament that allowed the government to fix all kinds of energy prices.

M Shamsul Alam, senior vice-president of the Consumers Association of Bangladesh, questioned the pricing process bypassing the BERC.

“We don’t know in what process the government is fixing the prices,” he said.

The gas-electricity price hike is as per the prescription of the International Monetary Fund, said Anu Muhammad, former member secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports.

“The government has no problem with this as all the burden will be put on the consumers. All the products’ prices will be hiked except the wages,” he added.

Some political parties expressed worry about the government’s move.

Ganosamhati Andolon said in a statement that with such a decision, the government is increasing the expenses for people who are nearing starvation.

Communist Party of Bangladesh said it is not acceptable that the government is hiking electricity and gas prices while hiding the truth.

“Wrong policy, corruption, mismanagement and system losses are the main reasons behind the high production cost,” it said in a statement.

Leftist Democratic Alliance demanded the phasing out of rental and quick rental power plants and the withdrawal of the high capacity charges that were being paid in the name of subsidy.

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