Photo : Messenger
The government is going to introduce 'dynamic price' method for fixing electricity prices aiming to be linked with the global energy price, as more than 42 percent of power is being generated with imported fuels.
While talking to The Daily Messenger, State Minister for Power, Energy, and Mineral Resources Nasrul Hamid said electricity prices are going to be hiked as the dollar price has increased abruptly.
Meanwhile, the government has hiked the price, avoiding the regulatory body because the dollar price has increased from Tk 80 to Tk 120, increasing the power generation cost.
When asked, Abul Khayer Md. Aminur Rahman, Member (Power) of Bangladesh Energy Regulatory Commission (BERC), told The Daily Messenger, “We haven’t received any proposal from the power distribution companies for hiking the price.”
Nasrul Hamid said, “There is a plan to adjust the price of electricity every month based on the world fuel market. Besides, the dollar price has increased unexpectedly, and the future dollar market will be unstable."
According to the Power Development Board (PDB), currently, 45.65 percent of electricity is generated from gas and LNG, 10.81 percent from coal, 26.06 percent from furnace oil, 4.05 percent from diesel, 10.66 percent imported, 0.92 percent from hydro, and 1.84 percent from renewable sources.
However, there is a directive from the IMF to eliminate the subsidy in the power sector from January 2025.
According to the gazette published on Tuesday by the BERC Act section-34A, 2003, the price of gas used in generating electricity has hiked from Tk 14 to Tk 14.75 per cubic meter or 5.36 percent from the February 2024 billing month. Besides, the price of gas used in captive power generation has been fixed at Tk 30.75 per cubic meter from Tk 30, with a 2.50 percent rise.
There are eight customer categories of gas consumers in Bangladesh. Out of these, 37 percent is used in power generation, 23 percent in industry, 18 percent in captive power, 10 percent in households, 7 percent in fertilizer production, 4 percent in CNG, and 1 percent in commercial and tea industries.
The government will have to bear a financial loss/subsidy of about Tk 6,570.54 crore in this sector in FY 2023-24 due to the difference between production, import, supply price, and selling price of natural gas.
Gas demand for power generation increases during the agricultural irrigation season, the month of Ramadan, and summer. Price adjustments remain unchanged in industrial, household, fertilizer manufacturing, CNG, commercial, and tea industries. As a result of this price adjustment, it may be possible to limit the existing subsidy to Tk 6000 crore considering the current market price of LNG and the dollar exchange rate.
"The price of fuel in the world market is abnormally high. If the gas price is increased at the consumer level taking this price into consideration, there will be more instability in the public life of the country,” energy advisor Professor Shamsul Alam, also advisor to the Consumers Association of Bangladesh (CAB), told The Daily Messenger.
He also added, “Consumers will not get that benefit if gas prices are reduced later. There is evidence of this in the past, even when fuel prices have fallen, transport fare rentals have not. So at least we should wait a little longer and see the world market to adjust the price.”
Mohammad Hossain, Director-General of Power Cell, said, "The government used to provide a subsidy of Tk10,000 crore to Tk12,000 crore on electricity. Now, due to an increase in fuel price in the international market, it has become a subsidy of Tk 40,000 crore.”
He also said, “The price of electricity has been increased by 20 percent at the wholesale level. Now if the distribution companies do not raise by 20 percent at the consumer level, they will fall into losses like Power Development Board (PDB). With this in mind, another round will be extended. If not increased, there will be no coordination. What has been increased has narrowed the gap somewhat.”
Messenger/Disha
