Weeks after a public hearing on gas tariff hike, the energy regulator will hold the same on a bulk tariff-hike proposal of electricity on May 18.
The Bangladesh Energy Regulatory Commission (BERC) decides to justify the state-run Bangladesh Power Development Board's proposal to raise bulk tariff through the hearing, says a senior BERC official.
Other stakeholders will also take part in the meeting.
According to the BPDB, its subsidy requirement in the 2022 calendar year is set to balloon to an estimated Tk 300 billion with increased energy prices.
The BPDB, the lone buyer of power from producers, fears that increased consumption of oil in power plants and gas tariff hike for electricity generation may escalate the subsidy requirement.
Subsidy requirement will, however, be lower than estimated if local gas production rises…, says a senior BPDB official.
Any increase in bulk electricity tariff means state-run electricity distribution companies will have to purchase electricity at higher rates.
Distributors like Dhaka Electric Supply Company, Dhaka Power Distribution Company, Rural Electrification Board and West Zone Power Distribution Company might also seek a hike in retail electricity tariff consequently.
Last month, the BERC held a four-day public hearing on the raising of weighted average natural gas price by 117.41 per cent to Tk 20.35 per cubic metre from existing Tk 9.36 per cubic metre and the commission's decision is due by June 2022.
Sources said the BPDB got subsidy worth an estimated Tk 117 billion in fiscal year (FY) 2021, which was 34.96 per cent higher than FY 2020's Tk 86.09 billion.
The average electricity generation cost currently hovers around Tk 6.61 per unit (1.0 kilowatt-hour) but the BPDB sells electricity at Tk 5.12 per unit.
It, thus, requires Tk 1.49 per unit as subsidy, the BPDP official argues.
The BPDB pays fuel costs, which change with the price movement in international market and as well as the fixed rate of the Bangladesh Petroleum Corporation.
For privately-owned furnace oil-fired power plants, the BPDB pays the private sector the fuel price in line with international market as private owners import furnace oil from international market.
The BPDB, however, pays fuel price as per the BPC-fixed rates for state-owned furnace oil-fired power plants. The BPDB pays diesel price as fixed by the BPC for both private and public-sector power plants. As the furnace oil and diesel prices rose both locally and globally, the BPDB's spending on power purchase has increased, the sources add.
The BPC increased diesel price by around 23 per cent to Tk 80 per litre from the previous Tk 65 per litre on November 04.
It also raised furnace oil price by 16.98 per cent to Tk 62 per litre with effect from Nov 05.
Increasing coal price in international market is also increasing the BPDB's power purchase costs from the largest operational Payra 1320 megawatt (MW) coal-fired power plant that depends on imported coal.
The BPDB also pays plant owners 'capacity charge' which is a sort of penalty for its failure to buy a certain portion of power readily available with the plants. According to the BPDB, the board got subsidy worth around Tk 89.29 billion from finance ministry in FY19.
It got around Tk 62.41 billion in FY18, Tk 56 billion in FY17, Tk 53.76 billion in FY16, Tk 50.43 billion in FY15 and Tk 47.14 billion in FY14. The BPDB got Tk 54.90 billion in FY13, Tk 50.01 billion in FY12, Tk 29.73 billion in FY11 and Tk 17.90 billion in FY10 as subsidy from the government.
Before FY10, it did not require adequate subsidy as most of the plants were less-expensive gas-fired ones. In 2010, the government planned to mitigate the then nagging electricity crisis through installing dozens of oil-fired rental and quick-rental plants.
The BPC's subsidy requirement started soaring with the commencement of power generation from oil-fired plants. Most of the plants were awarded based on unsolicited offers under the Speedy Supply of Power and Energy (Special Provision) Act-2010.
The law has a provision of immunity to those involved with a quick fix.
The government allowed entrepreneurs duty-free import of furnace oil to run plants with a 9.0-per cent service charge along with import costs as an incentive, said a senior power-division official.
Currently, the furnace oil-fired plants have the capacity to generate around 7,000 MW and the diesel-fired ones have the capacity to generate around 1,000-MW electricity.
azizjst@yahoo.com