Uninterrupted electricity supply vs. pricing is a tough choice

Md Rezaul Karim By Md Rezaul Karim, 28th Jan 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/3uc3ioq1/
Posted in Wikinut>Writing>Columns & Opinions

Power tariff hike is a matter of whims, not a rationale in Bangladesh- Dilemma between people and Government

When deals are made with power companies, affordable price should be a priority-

The government, for the second time in a year, raised the bulk electricity tariff by 6.66 per cent from the first day of this month. Tariff of each unit of electricity at the bulk level has moved to Tk 2.80 from Tk 2.63. Power tariff at retail level was enhanced from February this year and according to reports, the government is also contemplating raising this tariff as well. In February, the authorities enforced an 11 per cent increase in the bulk power tariff. In the second phase, it is a 6.66 per cent rise which became effective from August 1, 2011. In the first phase, each unit of electricity for bulk consumers went up to Tk 2.63 from Tk 2.37 consequent upon the power tariff hike, country's industries and the end-users suffered a terrible blow. Consumers under Dhaka Electricity Supply Company (DESCO) and using 200 units of power paying Tk 606.50 are under the new tariff, which used to be Tk 560 until January this year. Most of the bulk power purchasers are DESCO, Dhaka Power Distribution Company Ltd (DPDC), Rural Electrification Board (REB), West Zone Power Distribution Company etc. who purchase power from PDB.

Agricultural pumps, educational and religious institutions have been kept out from the price hike. According to Bangladesh Energy Commission Act, price increment at any level must go through public hearing. This time BERC organized the hearing only for the bulk users. But the regulator increased power tariff at retail level as well. On this point, BERC said the 5.0 per cent price hike at retail level is an interim order. This hike will be readjusted after the hearing at end-users' level. The regulator justified the price hike at retail level saying the bulk users should remain in the business. It argued that the retail price hike was nominal as the BERC tried to fix the rate considering purchasing ability of the people. Defending the price hike, the regulator said it is due to high import cost of furnace oil, and as part of efforts to cut system-loss and increase efficiency.

Already battered by endless cycles of load-shedding and outages, the general as well as commercial consumers of electricity are now faced with another predicament - a fresh hike in power tariff. The increase evoked criticism from all circles, who said the government could have waited until the acute power crisis in the country is solved. Business leaders said the hike came at a time when industries and businesses get only 30 to 40 per cent of their total requirements from power. The Consumer rights group also voiced concern saying that the new tariff would create further pressure on the customers. If the government could fix the faults at production stage, it might not be needed to increase price in such a way, it added. If the authorities can stop pilferage, the country will be able to save a lot of electricity. The consumer rights activists wanted drastic reforms in the sector first, before giving approval to any hike for power tariff.

In all public hearings, consumers tagged uninterrupted supply to the price hike move. Consumers and members of various business organizations said if the government fails to ensure its stable supple, why should they pay the inflated bills? Representatives of various business chambers and associations also expressed their concerns on the hike. They raised questions about making a projected 110 per cent hike in three years. It is not, however, clear as to how increased tariff will address the problem of systems loss, or distribution inefficiency as long as the pilferage of power rooted in systemic corruption as well as bureaucratic sloth continues to plague the power administration.

Power generation in Bangladesh depends heavily on gas. Nearly 90 percent power was produced in 2009-10 by using gas. But the use of liquid fuel has been rising for inadequate gas supply. Presently, liquid fuel generates around 5.0 per cent of electricity, which will go up to 20 per cent in 2013. The private sector's contribution to power generation is also rising which used to be dominated by the government only a decade ago. The country is now reeling under an acute electricity crisis coupled with low voltage and frequent load-shedding resulting in slowing down business activity, fall of industrial output and ultimate sufferings of the people. Country's overall electricity generation is now hovering around 4,000 megawatts (mw) against the demand for over 6,000 mw. Against this backdrop, why should the government raise the electricity tariff remains a big question.

Country's business leaders, expressing their mounting concern over the government's fresh electricity tariff hike, said the country's industrial growth will be severely jeopardized. A sudden and significant increase of electricity tariff would be detrimental to industry as well as the consumers, they pointed out. Cost increases should be reasonable, appropriate and within the context of the state of economy. It must take into account the impact on the economy, inflation and employment. A steep increase in tariff would provide greater incentives for theft and pilferage, they added. Due to poor and insufficient planning and necessary fund, coupled with inadequate supplies of natural gas - the main fuel for the country's power generation - installation of much-needed power plants is being delayed. Year's of apathy from the donor agencies in funding necessary power plants also aggravated the country's overall electricity crisis. Nagging electrify crisis all over Bangladesh has recently become an issue of concern of the government as the power sector is deemed by critics as among the worst performing sectors of the government.

While the pilferage problem was hardly addressed, subsequent governments did not adjust power tariff in line with investment costs, pushing the PDB to a perpetual loss-making situation. Power sector experts say a tariff hike should be undertaken only after exhausting all other options for increasing power revenue. These options, as there are sufficient reasons to believe so, have not been explored to their entirety. The price of one megawatt of electricity lost due to PDB's inefficiency is estimated at Tk 200 million. While a section of people is being benefited due to rampant corruption in the PDB, the entire power sector as a whole suffers immensely.

Past experiences suggest that when power tariff is raised, prices of essential consumer goods tend to make another jump. These are all inter-related matters. Consequent upon any power tariff hike, the prices of foodstuffs go up again in local markets, because the prices of farm inputs also go up. The general consumers and the industries of all sorts will continue to suffer from higher tariff, notwithstanding load shedding and low voltage. The authorities concerned do, first of all, need to ensure adequate electricity generation to satisfy the consumers. Without improving the situation in power sector it will not be a rational choice to force the citizens to pay for a service that they seldom get.


Electrical, Electricity, Fuel Price, Good Governance, Policy Of Energy Consumption, Power Tarrif

Meet the author

author avatar Md Rezaul Karim
I am a teacher engaged with the Southern University Bangladesh. I Like to use my spare time by writing and reading. I take it as a fun and source of inspiration in pursuing knowledge.

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author avatar Sivaramakrishnan A
28th Jan 2012 (#)

Cost of power has become an endemic issue for most countries. Nuclear power was touted as a saviour but after Fukishima disaster, everyone is on the back foot. Hydro power is no more easy as environmentalists are out in force everywhere. Power from fossil fuel is polluting and getting expensive. The way out is renewables but they require better battery technology to store energy when the wind is not blowing or when the sun takes a hiatus. There is a real risk here as only few countries have surplus oil and gas for export. No easy out unless there is technological breakthroughs. Thanks for sharing, Karim - siva

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author avatar Denise O
28th Jan 2012 (#)

This is a well written article. Well done! Thank you for sharing.:)

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author avatar Ivyevelyn, R.S.A.
28th Jan 2012 (#)

Thanks for this information, Rezaul.
My electricity bill is frightening!

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