BANGLADESH

The Power Development Board (PDB) has sent a proposal to the Bangladesh Energy Regulatory Commission (BERC) to raise the power tariff at bulk level by 15 percent on average.

"We received the proposal of the PDB to raise the power tariff at bulk level on Monday. The expert committee of the Commission will soon organise a review meeting on whether the proposal will be taken into consideration," BERC acting secretary Mohammad Abu Faruq told bdnews24.com on Wednesday.

PDB chairman A S M Alamgir Kabir on Tuesday told bdnews24.com, "The financial loss of the PDB is increasing day by day as the per-unit power tariff at bulk level is not being hiked."

Saying that the demand of power is increasing by 8-10 percent every year, the PDB chief said the PDB was setting up new power plants and purchasing power from the private sector-sponsored rental and Independent Power Producers' (IPPs) power plants to meet the increased power demand.

"Most of the private sector-sponsored rental and IPP power plants are run on fuel oil. Therefore, the cost of power generation is increasing with every increase in fuel oil prices. So, we've proposed to raise the power tariff at bulk level," he added.

As per the proposal of the PDB, the BERC, which decides power tariff increase based on government proposals, raised the rates in two phases this year.

In the first phase, per-unit power tariff was fixed at Tk 2.63 from Tk 2.37, an 11 percent increase, at bulk level with effect from Feb 1 this year, while in the second phase, per unit power tariff was raised by 6.66 percent to Tk 2.81 from Tk 2.63, effective from Aug 1.

Earlier, the government on Sep 29, 2008 increased per kWh power tariff by 16 percent and fixed at Tk 2.37 from Tk 2.04.

The PDB in its proposal said it purchases power from rental and IPP power plants, Electricity Generation Company of Bangladesh (EGCB) Ltd and Ashuganj Power Station Company Ltd. (APSCL).

It sells power to its bulk consumers – Dhaka Power Distribution Company Ltd (DPDC), Dhaka Electric Supply Company Ltd (DESCO), Rural Electrification Board (REB) and to its retail consumers – in its own distribution regions at the price fixed by the BERC.

The average production cost of per unit power was Tk 2.62 during 2009-10 fiscal, while the PDB sold it to the distribution companies at Tk 2.37.

The total supply cost of power was estimated at Tk 4.414 per unit for 2009-10 and Tk 4.986 for 2010-11, while the current per-unit power tariff is Tk 2.81 – up from Tk 2.63. So, the loss of the government for per-unit power cost stands at Tk 2.05.

The PDB in the proposal said it is necessary to raise power tariff by 72 percent in the current fiscal to bridge the loss gap. "If the proposed power tariff remains unapproved, the financial loss of the PDB will stand at Tk 73.44 billion for the current fiscal.

In the 2010-11 fiscal, the loss was Tk 45.86 billion.

The PDB has proposed to the BERC to raise power tariff in four phases, as it can create a negative impact at the consumer level if the tariff is hiked by 72 percent in one go.

It also proposed to raise the tariff by 15 percent in every phase – fixing Tk 3.24 from Tk 2.81 in the first phase in November this year, Tk 3.72 from Tk 3.24 in February next year, Tk 4.28 from Tk 3.72 in the third phase in July and Tk 4.93 from Tk 4.28 in the fourth phase in January 2013.