The shocking cost of electricity

Update:

Preparations are on for a price hike in electricity at all levels. As it is, the people are at a loss, what with the burgeoning cost of essentials, including rice. And now if the cost of electricity is increased, they will be in dire straits. It is the people who will bear the brunt of increased power prices at both a retail and wide-scale level.

A public hearing was held concerning the proposals of the various power distribution companies to increase the price of electricity. The Bangladesh Power Development Board, or PDB, proposed that the distribution companies sell electricity at a 14.74 per cent increased price per unit. On the other hand, the various distribution companies have proposed to increase the per unit price of power by 6 to 15.30 per cent. The Bangladesh Energy Regulatory Commission has proposed to reevaluate the price of electricity over the next three months.

We feel that the shortfall between the cost of power generation and distribution can be addressed without increasing the price of electricity at the consumer level. Firstly, though oil prices have fallen in the international market, the government has not decreased the market price in the country. If prices could be adjusted with the international market rates, the power production costs would go down. Secondly, the price at which the government would initially purchase power from the quick rental power plants is no longer justifiable.

The price of electricity from these power plants had been determined on a three to five-year term. These power plants have recovered their investments. If agreements to purchase power from these plants are to be renewed, then prices must be reduced.

Thirdly, at the rate at which the Rural Electrification Board ((REB) has invested to take power to all the villages, it will not be possible to recover the investment by selling this electricity. There is no scope to increase prices to meet this deficit. The government can provide REB with subsidy to make up for the shortfall. And the deficits in the power sector can further be decreased with increased efficiency and by curbing corruption and system loss or waste.

Another reason that the cost of power generation has gone up is that the government plans are not implemented properly. The government mid-term plans include power plants for low cost power generation, but in reality this has not materialised. There is no alternative to such power plants if low cost power generation is the price of electricity is to be lessened. Instead of taking up these initiatives, it is unacceptable to increase electricity rates as an easy way out.

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