21% Power Tariff Hike Proposed; Consumers Oppose Move at Public Hearing

The Bangladesh Power Development Board (BPDB) has proposed increasing wholesale electricity tariffs by BDT 1.20 to BDT 1.50 per unit. In percentage terms, this represents a hike of approximately 17% to 21% over current rates. The proposal to raise electricity prices at both wholesale and retail levels aims to curb mounting losses and subsidies in the power sector. However, stakeholders participating in a public hearing strongly opposed the price hike proposal.

The BPDB presented the proposal yesterday during a public hearing at the Krishibid Institution Bangladesh (KIB) auditorium in the capital's Farmgate area.

The Bangladesh Energy Regulatory Commission (BERC) organized the two-day public hearing on Wednesday and Thursday to review the proposed tariff adjustments for both wholesale and retail levels.

Politicians, business representatives, and consumer rights organizations, including the Consumers Association of Bangladesh (CAB), fiercely opposed the BPDB's proposal.

Speakers at the hearing argued that raising electricity prices amid high commodity prices would further drive up the cost of living for ordinary citizens, while expressing concerns over its adverse impact on the industrial and manufacturing sectors.

Highlighting a projected deficit of BDT 62,000 crore for the current fiscal year and BDT 65,000 crore for the upcoming fiscal year, BPDB Chief Engineer Md. Rezaul Karim warned during the hearing that the power sector would face severe risks if tariffs are not increased.

Participating in the hearing, Ruhin Hossain Prince, former General Secretary of the Communist Party of Bangladesh (CPB), stated that increasing power tariffs would escalate production costs in factories, leading to a dire economic situation.

He urged that no decision to raise prices be taken, adding that the BPDB’s recommendation failed to consider public interest and called for the public hearing to be scrapped.

Retail Impact Targets Low- and Middle-Income Consumers
According to the proposal, the average retail price of electricity for residential consumers is recommended to increase from BDT 7.20 to BDT 8.65 per unit, putting low- and middle-income households at the highest financial risk.

Utilities cited rising fuel prices, the high exchange rate of the US dollar, and capacity charge burdens as the primary reasons for the price adjustment.

BPDB's deficit from electricity sales stands at BDT 112.10 crore in the current fiscal year. This deficit is feared to triple to BDT 328.90 crore in the upcoming fiscal year.

To mitigate this massive financial shortfall, the BPDB proposed raising the average retail electricity price to BDT 8.65 per unit.

The impact of this price hike will extend beyond residential consumers to the country's productive and service sectors. Alongside residential units, tariff hikes ranging from 15% to 29% have been proposed for:

• Irrigation pumps
• Construction sectors
• Educational institutions and hospitals
• Commercial buildings and factories
• Battery charging stations

Wholesale Hikes Deemed Necessary to Curb Deficits
In addition to retail adjustments, the BPDB has submitted a major proposal to increase wholesale electricity prices.

According to the agency, the current wholesale rate stands at BDT 7.04 per unit, which is significantly below actual production costs. 

This disparity continues to inflate BPDB’s annual losses and the government's subsidy burden. The agency warned that if wholesale prices are not increased, losses could reach BDT 62,964.60 crore in the next fiscal year.

BPDB estimates indicate that:

• A BDT 1.20 per unit increase at the wholesale level would reduce the revenue deficit by BDT 13,298.16 crore.
• A BDT 1.50 per unit increase would reduce the deficit by BDT 16,622.70 crore.

Transmission Charges May Also Rise
The proposal also includes a potential hike in transmission charges by up to 19 poisha per unit, or nearly 60%. The Power Grid Company of Bangladesh (PGCB) stated that the price adjustment is necessary due to the modernization of the power transmission system, ensuring uninterrupted supply, and rising grid operation and maintenance costs.

The agency also emphasized the need to enhance its financial capacity to repay the principal and interest of domestic and foreign loans.

Analysts fear that if these proposals are approved, it will ultimately trigger another round of electricity price hikes for end-consumers. BERC announced that a separate public hearing on the application to increase retail-level electricity prices will be held on today.