Experts warn of adverse impact
Domestic gas prices up 50pc
CNG gas, power tariff also go up
Although the production cost of electricity is falling with the decline in international oil prices, the government yesterday hiked the retail price of electricity by 2.93 per cent on an average. The retail price of electricity will be Tk 6.33 a unit against the earlier Tk 6.15. The price of gas has also been increased by 26.29 per cent on an average, with a hike of 50 per cent for domestic users. The increases in electricity and gas prices will both be effective from September 1. Domestic users will now have to shell out Tk 600 and Tk 650 for single and double burners respectively, up from Tk 400 and Tk 450 respectively. Metered connections will see a hike to Tk 7 per cubic foot from Tk 5.16.
The price per cubic metre of compressed natural gas (CNG) at refuelling stations, meanwhile, has been raised from Tk 30 to Tk 35. The regulator has also increased the price of gas in other sectors, excluding fertiliser production and power generation. The bulk price of electricity has been raised after three years and the retail price of electricity after one year. On the other hand, the price of gas has been raised after seven years. During a press conference at the hearing room of the Bangladesh Energy Regulatory Commission (BERC), commission chairman AR Khan termed the increases in prices of electricity and gas as rational. He justified the hike, saying the earning capacity of people has also increased in the last couple of years.
In many countries, people need to spend 10 per cent of their income just on electricity bills. Here, in Bangladesh, people do not need to spend more than five per cent, Khan said, adding that gas prices in Bangladesh were the lowest in the world.
We had to take many aspects into consideration before raising the gas prices in Bangladesh. The increase in gas prices at the retail level had become imperative to ensure energy security, he explained. The BERC chief, however, did not say anything about lowering the fuel prices in the domestic market. He told journalists that the regulator does not have the authority to lower the fuel price. Interestingly, the announcement of the revised tariffs came after six months of the public hearings that were conducted during January and February this year, following a meeting with Prime Minister Sheikh Hasinas energy adviser Tawfiq-e-Elahi Chowdhury on Wednesday. The regulator was supposed to have announced its decision on the price hike within 90 days of the hearing.
When asked about this, the BERC chief said they had put a great deal of thought and held discussions with all the authorities before hiking the prices of electricity and gas. We took time before taking any decision. We didnt want the increases to burden the consumers, he said, adding that the price of power for irrigation users and indigent consumers, who use up to 50 units, has remained unchanged.
Prof M Shamsul Alam, energy adviser to the Consumer Association of Bangladesh (CAB), told The Independent that the price increases in electricity and gas were completely irrational. During the mass hearing, we told the regulators several times that there was no point in increasing the price. Yet, the prices are now being increased without any apparent reason, he said. He said the regulator, on being actuated by the government, has already increased the bulk price of electricity by around 100 per cent and the retail price by about 54 per cent since March 2010, citing that power generation costs have increased due to the dependence on expensive fuel oil.
Now the power price hike has come at a time when the Brent crude oil prices have dipped below USD 40 a barrel, sliding from around USD 115 since June 2014, Prof. Alam pointed out, adding that instead of increasing electricity prices, power generation costs could have easily come down if the government had sacrificed its surplus in the sale of fuel oils.
Former Bangladesh Bank (BB) governor, Dr Salehuddin Ahmed, told The Independent that the impact of the price hike of gas and electricity would directly hit the livelihoods of common people. He also said that overall, the impact would be visible immediately, even in the business and industrial sectors.
The government has taken this decision as it is an easy way of collecting money from the people, he said, adding that the price of oil in the world market is going down, but the government was hiking the prices of gas and electricity. It will directly affect the living costs of the people.
The government should not increase the prices of gas and electricity; rather, it should reduce system losses and corruption in this sector to ensure the welfare of the common people, he added.
Referring to the continuous hike in prices of electricity, former executive director of BRAC and Professor of the Economics department of BRAC University, Dr Mahabub Hossain, said it would obviously affect the livelihoods of the common people, as the price of electricity has been increased several times during the last two years. He noted that the government is being compelled to increase the prices of electricity since production costs of power have increased.
The impact would hit the market as the production costs of the industrial sector will increase due to the increase in prices of electricity and gas, he said. The increase in prices of gas and electricity will hit all sectors of the economy, he said, adding: It will hit the market directly, which would exert pressure on the common people. He, however, said it was not clear why the government should increase the price of electricity when the price of oil was exhibiting a downward trend in the world market. We dont even know what is the actual price of imported electricity and whether it is viable or not, he observed.
