Hike in power, gas tariffs likely

Gas and power tariffs might see a rise but fuel prices are likely to remain unchanged despite the fall in oil prices on the international market, according to officials at the power, energy and mineral resources ministry.

The issues were discussed at a meeting on the overall situation of the energy sector at the Prime Minister's Office yesterday. Senior officials of the energy and power divisions were present there.

The meeting decided that new electricity connections would be provided to industries, said a Power Division official, who attended the meeting.

Power Division Officials told the meeting that more funds were needed to set up power plants to meet the growing demand for electricity.

Power distribution and marketing companies must be made self-sufficient in terms of funding to help them keep up electricity generation, transmission and distribution, they said.

At present, the difference between the power generation cost and the retail price of power is Tk 1.5-Tk 2 a unit. 

They also advocated raising gas tariffs to prevent wastage in the sector.

The meeting then asked the energy and power divisions to make a move to raise power and gas tariffs.

Contacted, Power Secretary Monowar Islam said the meeting discussed the overall energy and power situation. “Utility companies have already applied to Bangladesh Energy Regulatory Commission [BERC] for raising power tariffs.”

“The commission is an independent agency. It will decide on it as per rules,” he said.

In January this year, the BERC organised a series of public hearings after state-controlled companies for marketing and distribution of power and gas appealed to it to increase gas and electricity tariffs. However, the BERC didn't do so.

Talking to The Daily Star, the secretary said the government decided to lift the restrictions on providing power connections to industries as the country is producing adequate electricity at present. Industries will now get connections easily.

According to official statistics, the country's electricity generation capacity is 11,532MW with average daily generation standing at 7,500MW. The demand for electricity is rising by 10 percent annually.

The government last raised the gas tariff in 2009. In the last six years, only CNG prices were increased twice in 2011, while retail power tariff was last increased in March last year.

Yesterday's meeting also discussed the prospects of cutting fuel prices following the slide in oil prices by more than half on the global market in the last one year.

The drop in oil prices allowed state-run Bangladesh Petroleum Corporation (BPC) to make profits for the first time in more than a decade.

 Last week, Finance Minister AMA Muhith hinted that fuel prices might be reduced to take to consumers the benefits of falling oil prices on the global market.

But at yesterday's meeting, energy division officials opposed reduction of fuel prices, as the BPC still has a huge debt and other liabilities.

Asked, BPC Chairman AM Badrudduja said the government had not yet sought the state-run agency's opinion on cutting fuel prices.

The BPC has a debt of Tk 30,000 crore, and the government has been informed about it, he said. 

In January 2013, the government last increased prices of diesel and kerosene by Tk 7 a litre, and that of octane and petrol by Tk 5 a litre to reduce its subsidy burden.