The government yesterday increased the electricity price by another 5 percent at the retail level, 19 days after a similar increase.
The swift rise in electricity price is set to put the consumers, who are struggling with the inflationary pressure of commodities and services, into further disarray.
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According to a government circular issued Tuesday, the weighted average price will be Tk 7.82 per kilowatt hour, instead of 7.13 kWh a month earlier. The new price will be effective from today, reads the 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.
The wholesale electricity price has also been hiked by around 8 percent on average.
Earlier on January 12, the government hiked electricity prices by 5 percent at the retail level.
It was the 12th price hike since 2010. By this time, the electricity price at retail level was hiked by 106.30 percent.
The government also increased the gas price by up to 178 percent in industries and power sector on January 18.
Nasrul Hamid, the state minister for power, energy and mineral resources, said the hike is a part of reducing subsidies in the power sector.
“We want to get rid of subsidy; that is the main goal,” he told The Daily Star.
He said the government will adjust the electricity price every month from now on. “If the fuel prices in the international market have increased, we will increase the price. If not, we will not.”
The rise came as a surprise for the consumers and economists alike.
Mahbubur Rahman, who works at a private company, said he mistook the recent price hike with increase on January 12 one.
“Watching it in the social media yesterday morning, I thought the government issued the gazette notification for the last price hike of January 12,” he told The Daily Star.
“I could not believe that the government could hike electricity prices again so soon. It’s unbelievable. We have our limited income; how can it be possible to survive if they hike prices continuously,” he added.
Economist Ahsan H Mansur 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 your talking about?” Mansur questioned when this reporter contacted him for comments.
Economists and energy experts said the government lacked a clear strategy on bringing subsidy to zero. They were also critical about putting the price burden on the consumers instead of curbing corruption and illogical expenditure in 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 Dr Mansur, executive director of the Policy Research Institute of Bangladesh.
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 said, adding that the government should make a strategy by taking inputs from all the stakeholders on how to reduce the subsidy.
Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, echoed Mansur’s view.
He said the government needs to bring changes in the expenditure structure to make it more efficient instead of putting all burden on the consumers.
“There are questions about huge capacity payments to the private power plants, delay in phasing out rental and inefficient plants. But the government didn’t solve those problems, and hiked prices continuously,” he said.
“They [government] bypassed the Bangladesh Energy Regulatory Commission, but there is scope to make a strong commission to identify the loopholes in the system.”
The government raised the price bypassing the public hearing of the BERC, a day after passing the law in parliament which allowed the government to fix all kinds of energy prices.
Senior Vice President of Consumers Association of Bangladesh, Prof M Shamsul Alam questioned the pricing process bypassing the BERC.
“We don’t know in what process the government is fixing the prices,” he said.
On January 21, Consumer Association of Bangladesh, revealed a study saying the average annual inflation rate was 11.08 percent in Dhaka city in 2022. Middle- and lower-income people had to compromise on their diet and living standards due to the increase in the prices of essential commodities and services.
The government started such a move to reduce subsidies in various sectors while negotiating with the International Monetary Fund to get a loan of $4.7 billion.
Anu Muhammad, former member secretary of National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, said yesterday that the government is increasing gas-electricity prices following the IMF prescription.
“The government has no problem with this as all the burden will be put on the consumers. All the products’ price hiked, except the wages.”
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 extra expenditure to the people who are already almost in a starving situation.
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 phasing out of rental and quick rental power plants and withdrawing high capacity charges, which were being paid in the name of subsidy.