The Bangladesh Power Development Board (BPDB) has submitted a proposal to increase the wholesale price of electricity without cutting off the remnants of the flawed application for increase in gas price. The Bangladesh Energy Regulatory Commission (BERC) has returned the gas as it was defective as usual.
Commission member Mohammad Bazlur Rahman confirmed this information to Barta24.com. He said BPDB has submitted a proposal to increase the wholesale price. Proper legal procedures were not followed when submitting the proposal. So they have been asked to make a full proposal. Responding to a question on what kind of deviation has taken place in the law, he said that a three-year audit report has to be submitted along with the proposal, one-year estimated income-expenditure account has to be submitted, and what kind of impact can be had on consumers if prices are increased as per the proposal. These reports have to be submitted. Some more reports have to be submitted along with these, which were not with the application. Therefore, BPDB has been asked to submit a full proposal without rejecting or accepting the application.
BPDB is the sole buyer of electricity, buying electricity from its own generation as well as from imported and privately owned power plants. It has been selling all the electricity to 5 distribution companies at wholesale prices. And they are distributing in the urban areas of Mymensingh, Sylhet and Chittagong divisions.
Saiful Hasan Chowdhury, director of BPDB's public relations directorate, told Barta24.com that electricity was being sold at a lower price than the cost of production. Due to this BPDB is going with losses. So a proposal for wholesale price adjustment has been made.
It has been proposed to increase the rate by how much. In response to such a question, he said, "We have not proposed any specific price increase." We have said in the proposal that we are already incurring some losses as we are selling at a lower price than the purchase price. The recent rise in fuel prices has pushed up production costs. If the prices are not adjusted in the current situation, the power development board will lose Tk. 30,000 crore in 2022. So price adjustment has been proposed. In addition, if the price of gas increases, the losses will increase further. BERC has also been asked to adjust the price of gas.
BERC is the legal body for finalizing prices. After receiving the application, they first check and select. If the application is appropriate, a public hearing is held by meeting the commission. Then the price is announced. When the wholesale price goes up, the distribution companies submit proposals to increase the retail price based on it. The primary consideration of the application is that the concerned institution has to prove on paper the rationale of increasing the price. If the price does not increase, the effect will have to be calculated. Many times in the past, BERC has refrained from raising prices by recommending subsidies to the government. Last March, the price per unit was increased from Tk. 4.77 to Tk. 5.17 in March 2020.
Mohammad Hossain, director general of Power Cell, a development and research institute of the power department, told Barta24.com that last year there was a wholesale loss of around Tk. 9,000 crore. This time the losses will increase further due to the increase in oil prices.
On the other hand, the gas distribution companies have submitted ridiculous proposals to the commission. In the current context, they have no chance to propose to increase the price of gas. First Petrobangla has to increase the wholesale price. Then the companies will come up with a proposal to increase the retail price to raise that money. This is what has happened in the past. Petrobangla gave a letter to increase the price of gas stating that the losses are being multiplied due to the increase in the price of LNG. The BERC rejected the proposal as the application was not appropriate. At the same time, distribution companies submitted proposals to increase prices by 117 percent. For this reason, BERC has returned the applications.
Energy expert Professor Shamsul Alam told Barta24.com that efforts are being made to fool the people. Bangladesh is importing LNG (liquefied natural gas) from long term contracts and the spot market. The price of gas bought from the spot market has increased by 5-6 percent. It is believable that the price of 100 percent gas has to be increased by 117 percent as the price has increased by 5-6 percent! They are showing calculations with manipulated accounts, these calculations are not realistic. We are in favor of not importing that amount of LNG if necessary. People's sufferings have increased after the rise in fuel prices. In this situation, an increase in gas price is not desirable in any way. At the moment, our economy is not ready for either subsidy increases or price increases. Instead, that amount of LNG import should be reduced by rationing. If the price of gas increases, the issue of increase of electricity price will also come to the fore. We think there are many options besides raising the price of gas and electricity.