Power tariff hike to drive up production cost, stoke inflationary pressures

Any increase in the retail tariffs of electricity will drive up the production cost and lead to a further spiral in inflation, worsening the condition of lower-income groups, said presidents of two chambers today.

"A hike in electricity tariff will only exacerbate inflation and increase the sufferings of lower-income people," said Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries (BCI).

He made the remarks while speaking to The Daily Star after a technical evaluation committee of the Bangladesh Energy Regulatory Commission (BERC) yesterday recommended raising retail electricity prices by 15 per cent.

The Bangladesh Power Development Board (BPDB) has sought the tariff adjustment.

It came at a time when inflation, despite easing in recent months, in Bangladesh has continued to persist at over 8 per cent. 

"If the BPDB does not want to increase suffering, it should rather reduce the prices by increasing its efficiency. Profit does not come by hiking prices, but rather by improving efficiency. We have reasonable doubts about its competitiveness," Parvez said.

"It is high time to enhance efficiency."

Parvez said there is a slowdown in the global economy and there is fear of a recession in Europe.

"At a time when sustaining exports is a challenge, hiking the electricity price will increase the cost of production."

The BCI president demanded a reduction in wastage and a cut in the value-added tax, and other taxes to keep prices at tolerable levels so that industries can survive and low-income groups don't suffer.

"When concerns regarding a global recession loom large, the spike in tariffs of electricity will lead to a hike in the cost of production," said Faruque Hassan, president of the Bangladesh Garment Manufacturers & Exporters Association (BGMEA).

"Rather than hiking prices, they should cut the system loss. Still, there are a lot of illegal electricity connections. So, if the government disconnects the illegal connections, the cost that has increased will be covered."

The BGMEA chief said instead of increasing electricity prices, the government may consider raising the price of gas to some extent and ensure the supply of the fuel to industries in a bid to enable them to produce more.