Gas and Electricity price will increase again

Even though private power plants are sitting idle, the center has to pay the rent. As a result, the losses of the power sector are increasing.Gas and Electricity price will increase again.In order to cope with this loss,the government is opting for an increase in the price of gas and electricity.

Last year, the government paid taka 15,000 crore for the power plants only as center rent.This year,the amount will be taka 20,000 crore.Apart from this,the government spends taka 19,000 crore to import liquefied natural gas (LNG) from abroad.

Bangladesh Energy Regulatory Commission (BERC) has concluded a public hearing on the proposal for raising electricity prices. The announcement of the price hike may come soon. Meanwhile, the cabinet on Monday approved the drafting of the BERC (Amendment) Act, with the provision that fuel prices can be changed multiple times a year.

Under the existing BERC Act, the price of electricity, gas and oil cannot be increased more than once in a financial year. BERC will raise the price multiple times a year if the law is amended.

The BERC Act,also reformed in the year of 2005 and 2010 , which was passed in 2003. However, the amendment did not make a big difference. The BERC Act states that “the tariff set by the Commission can not be changed more than once in any fiscal year, unless there is any change in the form of changes in energy prices.” This time it was amended to say, “The tariff set by the Commission is a single or separate commission for a fiscal year. By order, you can make changes one or more times as needed. ‘

Professor of Department of Geology at Dhaka University Badrul Imam said, ‘The government has started importing LNG and coal from abroad.Government used to import oil from before.Expenditure on electricity and fuel has increased due to increased dependence on imported fuel. To meet that expense, the cost of gas and electricity will have to be raised. That is why the law is being amended.

Initiatives to amend the law. The government wants to raise prices multiple times a year. Half of the power plants sit idle causing damage.

However, the fuel expert complained that the government was not giving any importance to the search of gas in the ground due to the interest of foreign companies and LNG traders. If we got our own gas, there was no need to raise the price. “We are discovering and extracting a portion of the gas still on the ground,” he said. We have not yet explored the major areas. We need to dig wells in Bangladesh and search for gas. ”

In this regard, Minister of State for Power, Energy and Mineral Resources Nasrul Hamid said that the price of fuel has increased in the international market. Things change within a year. That is why amendments are being made to make the law appropriate. But there is nothing to fear. Whatever the government does, it will do so considering the interests of the people.

In the last 10 years, electricity prices have increased six times at retail or consumer level. And the wholesale level has increased four times. Of these, the Consumers’ Association of Bangladesh (CAB) filed a writ in the High Court when electricity prices were raised twice in one year. The court wants to know from BERC where the law is to raise prices twice a year. The BERC could not even explain.

Cab’s energy advisor M Shamsul Alam said, ‘The change in the BERC Act is like a joke with the people. If the government can curb deprivation, it can reduce the cost of Tk 12,000 crore in the gas sector and Tk 10,000 crore in the power sector. Then there is no need to raise the price of gas and electricity.

The oil-based power plant has become a burden to the government. Power plants are often closed because of the high cost of generating electricity through oil. But despite the closure, the power development board (PDB) has suffered losses due to the rent of the power plant (capacity payment) to the private entrepreneurs. Last year, the rent amounted to taka 15,000 .This year it will be Tk 20,000 crore.

PDB losses have increased due to the oilfields.The government subsidized huge amounts to cover losses at different times. In the financial year of 2017-18, the subsidy was taka 4,545 crore.Last year the subsidy was 7,970 crore.If the price of electricity is not raised in the current fiscal year the subsidy amount will be taka 8000 crore.

During the summer and winter, the daily production is around 8,000-3,000 MW. However during the summer time, cuple of months the production ranges from 12 to 12.5 thousand MW. Now there are 20,000 MW power plants exist in the country.

According to a detailed plan of power or power system masterplan was made in 30 years, calculating how many megawatts of electricity would be needed in the country in the year of 2010. In this light, the government gave the task of building the power plant. But on December 2017, the government was not taking electricity from these centers, though it was allowed to build 2,000-megawatt oil-based power plants. The government has paid taka 3400 in that case.

The PDB has said , ‘Due to the increase in the price of electricity, the deficit in power generation will be taka 7,353 crore by 2020.

According to the BERC data, PDB has paid only Tk 12,220 crore in the of 2018 years, last year is taka 15,515 crore. This year, we have to pay taka 20,031 crore.

Experts and PDB officials say a large part of the center’s rent or capability payment is going to the back of a sluggish power plant. That is, the center is closed all year long. But at this time the centers are renting. PDB pays 170 to 175 crore a year for 100 MW power plant.

According to BERC sources, the cost of production per unit of gas-based center is 2.73 taka and the average cost of the oil-based center is 20.41 taka. And the only cost per unit of diesel based power plant is 25.21 taka .

The average production cost of electricity for January 2009 was 2.61 taka per unit. Currently 6.25 taka . The average production cost of electricity has increased by about 139 percent in almost a decade.

The average production cost of a unit of APR Energy Bangladesh Limited is 744.39 taka. From August 2018 to August last year, the center has been renting 568 crore.On the contrary,very little has been produced.

Daudkandi Bangla Truck’s 100 MW center is in the forefront of renting the center without generating electricity. The production cost per unit of this center is 240.71 Taka .For the last 15 months, the PDB has leased Tk 434 crore for 200 MW (from May 2008 to July 2019).

PDB has leased Tk 350 crore to two centers of 100 MW in the last one year, despite being closed all year.

In February last year, the commercial production of Paramount Bitrack Energy Solutions’s 200 MW oil-based plant came into being. Until last July, the diesel-based center did not produce any electricity, but the center rented more than Tk 170 crore.

Former caretaker government chief adviser Special Energy Assistant Md. Tamim said the government’s forecast of electricity demand was not realistic. The government thought electricity connections would be taken in the industry. But current electricity prices are not high and constant. On the other hand, the factories produce less electricity through their own generators than gas, so why would they buy government electricity? In this situation, it is not meant to impose this disorder on the people by raising electricity prices.

Tamim said the government has extended the tenure again after the expiry of the majority of the rental power plants, which were allowed for 3 and 5 years between the session of 2018-2012.These centers will have to be canceled now. If the PDB’s electricity is kept constant and prices are reduced, the power consumption in the factory will increase. It will reduce the loss of government if unused power consumption increases.

News Room, January 02,2020