IMF discusses subsidies with Power Division

A visiting delegation of the International Monetary Fund (IMF) held a meeting with senior Power Division officials yesterday mainly over subsidies, reports UNB.

The power sector has been incurring huge losses, such as Tk 27,477 crore in fiscal year 2021-22 and Tk 6,200 crore in fiscal year 2017-18, for selling electricity at a lower rate than that paid for its purchase through the use of subsidies.

"The BPDB has been incurring a loss of about Tk 5 per unit," said an official of Bangladesh Power Development Board (BPDB).

A recent report from the Implementation Monitoring and Evaluation Division predicted that the BPDB's total loss for fiscal year 2022-23 and fiscal year 2023-24 could be Tk 1,13,532 crore.

When providing a $4.7 billion loan to Bangladesh, the IMF had tagged a number of conditions, including one on raising electricity tariff to reduce the subsidy.

As per the condition, the government raised the bulk power tariff by about 19.92 percent to Tk 6.20 per kilowatt hour (each unit) from Tk 5.17 from December 2022.

Still the BPDB has been incurring a lot of losses.

The IMF has been insisting on further raising the tariff, said a Power Division official, adding that they have shared various options.

The Power Division, however, conveyed a government message that there was no plan to increase power tariff before the next general election due for January 2024, said sources.

When contacted, Senior Secretary at the Power Division Habibur Rahman declined to comment on the meeting outcomes.

He had led the Power Division in yesterday's meeting at the Ministry of Power, Energy and Mineral Resources, according to official sources.

The team from the IMF, led by Rahul Anand, Mission Chief for Bangladesh, arrived in Dhaka on October 4 to discuss the terms of the $4.5 billion loan.

The team is scheduled to leave Bangladesh on October 19 after a series of meetings with different ministries and their subsidiaries and also with the central bank officials on the release of a second tranche of the loan.

The second tranche is expected to be released next month.