Minister, adviser differ on power price hike plan

FINANCE Minister AMA Muhith and prime minister’s energy adviser Tawfiq-e-Elahi Chowdhury Sunday differed on the issue of possible power price hikes in the next three years.

“Power prices will have to be increased bit by bit in the next three years to reduce the subsidy burden on the government,” Muhith said at a news briefing at the capital’s Bidyut Bhaban.

“By that time, we will strike a balance and won’t have to subsidise power prices,” he said.

However, after Muhith left the briefing, Tawfiq-e-Elahi asked the media not to take the minister’s comments literally.

“I disagree with the finance minister’s remark that electricity prices will go up over the next three years.

“Fixing power prices is a continuous process. It cannot be predicted whether prices will be increased or reduced. All I can say is that prices will be adjusted in future,” the energy adviser said.

The Power Division organised the briefing on the power situation and deals reached with organisations and companies under the division.

Muhith said he did not think the latest hike was caused by rental power plants.

Defending the government’s decision to opt for costly rental power plants, he said, “What could we do? The country would have plunged into darkness had the rental power plants not been set up.

“No statement can be as silly as the one that the price of power is rising because power is bought from rental plants.”

The minister also talked about the government’s plans and said public concern over power production would be over once the plans were implemented.

“Use of coal, renewable fuel and furnace oil has been increased to boost power production. A deal to set up a nuclear plant has also been signed,” he added.

Muhith’s comments came less than two weeks after a Tk 0.55 per unit hike in electricity prices took effect on December 22 for all retail customers across the country.

The price of per kilowatt-hour electricity soared by 13.24 percent to Tk 4.71 in the first phase of the two-stage increment announced on December 1.

The energy regulator will again increase the retail tariff by 7.09 percent on February 1, taking the per unit price to Tk 5.02.

Power tariff was also raised for charities, irrigation pumps and religious institutions by 5 percent.

It was the second rise last year. Earlier on February 8, Bangladesh Energy Regulatory Commission (BERC) increased the average retail electricity tariff by 5 percent.

At a news conference on December 22, BERC Chairman Syed Yusuf Hossain said the increase in electricity prices would help the government save about Tk 1,000 crore in annual subsidies. He, however, said the estimate was not final.

Officials say the government has been spending huge sums of money on energy subsidies, contributing to rising inflation and higher bank borrowing. This price hike will ease the pressure on government coffers.

The government claims the electricity prices in Bangladesh are the lowest in South Asia.

Muhith Sunday said power would be imported not only from India, but from other countries, including Nepal and Bhutan, as well.

The government is having difficulty feeding its diesel-run power plants (see related story on page 20).

The demand for fuel oil has risen to 68 lakh tonnes in the current fiscal year, which was 48 lakh tonnes in the last fiscal year, as Bangladesh is importing a huge amount of oil for rental and quick rental power plants.

The energy adviser, however, said higher power production was contributing to economic growth.

State Minister for Power Muhammad Enamul Huq, Power Secretary AK Azad and Power Development Board Chairman ASM Alamgir Kabir were present at the briefing.

Related article

Discord on power tariff baffles all


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