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Multiplied burden of power tariff hike

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04th-Dec-2017       
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Dr Anu Mahmud :
The government has raised power tariff once again at the retail level at an average of 5.3 per cent or Tk0.35 per unit, a move that we fear will put more pressure on consumers affordability at a time when the cost of living is hurting people at its worst. It will also affect the economy adding to cost of production and supply chain at all levels to make business costlier. There is also the real fear that it will add to inflation and make exports competitive. Our exporters, particularly readymade garment exporters have hardly any leverage to pass the extra cost on buyers.
The government raised power tariff in September,2015 and the new move came within two years leaving hardly any credible justification, except for more money for running a lavish government. The power sector is not subsidized any more that the government needs more money to overcome the losses.
But it is paying several times higher power tariff to private producers in unsolicited projects to make them rich. For government leaders and bureaucrats it also offers opportunity to get richer.
It appears that Bangladesh Energy Regulatory Commission (BERC) has ignored all protest that stakeholders including political leaders, Bangladesh Consumers Association (BCA) and representatives of chamber bodies and trade associations made when it held the so-called public hearing from September 25 to October 05,'17. The hearing was just eyewash like every other occasion while the BERC faithfully works to implement the government plan. This time also it sidetracked factual objections as it announced new tariff hike on November 23,'17 to be effective from December 01. Surprisingly, the tariff hike will be effective only at retailers level, not at distribution level.
As per the new tariff rate, household consumers will have to pay Tk 4.00 per unit for a total monthly usage of 0-75 units. They will have to pay Tk 5.45 per unit for using 76-200 units, Tk 5.70 per unit for 201-300 units. At the highest consumers will have to Tk 10.70 per unit for using more than 600 units a month. Lifeline household users (0-50 units) will be billed at Tk 3.50 per unit. Irrigation pumps will be charged at Tk 4.00 per unit.
The question is why the government is forcing consumers to take extra load every time without improving governance in the power sector which is marred with high corruption. Stealing electricity by employees for giving illegal employees is common and waste of resources with inflated purchase bills is taking away the bigger chunk of income. It is not justified to force users to pay for it. We must say a government eager to make people's life better or at least not to overload their life with hefty electricity bill, can't do it.
According to media reports, despite all arguments against the hike, electricity has been made pricy by 5.3 per cent on an average. Lower-middle class and middle-class people are inevitably going to face a major blow of another price hike of all commodities soon after the tariff hike comes into effect.
More importantly, the price of electricity for small industries has been increased by 7.10 per cent. Industrialization is very slow in the country and industries are incapable of generating an adequate number of jobs for the increasing number of job seekers. The tariff hike will aggravate this situation. Hike in power tariff will be added to the operating and production costlier. As a result, industries will face difficulties to remain competitive in local and international markets and will
tend to cut costs otherwise. In this process, the prospect for new job creation will be squeezed further.
With weak mechanisms of market monitoring and checking illogical price hike of essential commodities, another spell of price spiral is almost inevitable in the wake of the inflated electricity cost. Ultimately, consumers will have to bear the multiplied burden of the tariff hike. The poor, though exempted from this new hike in tariff, will not be able to escape the likely price hike of commodities. Thus, the tariff hike will affect all in society irrespective of their socio-economic statuses.
In fact, each of the eight phases of tariff hike in the last eight years had considerably affected the lifestyle of people. The latest phase of the hike will only add to their miseries. But the authorities concerned have failed to take their hardship into consideration and continue opting for putting more burdens on the people again and again! Not to consider many other ways to reduce the cost of electricity but to make it pricier is not a pro-people strategy.
It is nothing surprising that the energy adviser or the state minister concerned would defend the latest power tariff hike at an average rate of 5.3 per cent terming the upward revision 'insignificant' and 'tolerable'. Anything said otherwise by them would put to question the very decision of the energy sector regulator on the power tariff increase. But the poor consumers, the ones belonging to the fixed income bracket in particular, know where the shoe pinches as their cost of living would go a few points up from the month of December. The truth is that expenditure on account of power-use, for most consumers, had gone beyond their tolerable limit even before the latest hike. The average power tariff has recorded a 90 per cent increase in nine phases since 2010.
Tariffs of utilities, depending on circumstances prevailing at different times, do require necessary review and the Bangladesh Energy Regulatory Commission (BERC) is there to facilitate it and make dispassionate decisions. The regular, however, is expected to protect the lawful and genuine interests of the consumers. In accordance with the rules, it does organize public hearings on proposals coming from the utility service-providers.
For instance, the latest power tariff hike is being put into effect to meet the 'increased operational costs' of the power distribution companies. The operational cost has gone up because of the hike in salaries and benefits of the employees of these companies. Consumer's rights organizations have condemned the power tariff hike on this particular ground as unjustified.     
Overall, the power consumers have justified reasons to be aggrieved by the decisions taken on tariff increase from time to time. They have a feeling that the hikes are due to wrong policy decisions of the government. The proliferation of cost-intensive rental power plants and failure to operationalize conventional least-cost power plants over a long period of time are largely responsible for higher power tariff.
Moreover, the repeated extension of the tenure of the legal provision that protects and facilitates installation of cost-intensive power plants without competitive bidding and thus the purchase of power at relatively high rates have given rise to suspicion among the consumers about the very intent of suspicion among the consumers about the very intent of relevant government agencies.
Besides, the amount of subsidy made available to the Power Development Board (PDB) has also increased manifold because of procurement of power from the rental plants of 'exorbitant' rates.
Though the power situation has improved in recent years, this has entailed a very high cost. Both the government and the consumers are paying through their noses. But the cost could have been far less, had the government exercised prudence and put in place the right policies in right time, in terms of building up higher power generation capacity opting for the least-cost ones. A few such projects are now in the offing. But those could have been operational by now had the government meant business from the very beginning.  
What Bangladesh and other Least Developed Countries (LDCs) need at this hour is to ensure affordable and productive use of adequate electricity for economic transformation, which is crucial to achieving the Sustainable Development Goals (SDGs). The latest edition of a United Nations (UN) report regarding trade and development noted that the purpose of electricity access should not only be to meet basic domestic needs as lighting, but also to use it for productive purposes. It was found that around 53 per cent of enterprises in Bangladesh identify lack of consistent access to energy as a major constraint.
Energy sector in Bangladesh is changing for the better in a very vibrant way in lives of the people miserable. All sectors of the country bore the brunt of shortage of electricity. Entrepreneurs would not feel encouraged to set up industries due to acute dearth of electricity. Even many prospective running projects had to be shut down for want of electricity. This had a serious negative impact on the country's economic growth.
It is heartening to note that the use of solar power is becoming popular among the poor in remote rural and char areas of the country. Small businessmen, people connected with cottage industry and other professions, and students are enjoying the benefits of solar energy. The programme is playing an important role including reducing the health risk of rural families, checking environmental pollution, saving bio-gas and contributing to afforestation.
Besides, through reduction in the use of kerosene oil substantial amount of foreign exchange is being saved.
Environmentalists have put emphasis on promotion and use of renewable energies for protecting both climate and life. There is an enormous scope of reducing the gradually mounting pressure on fossil fuel through boosting use of renewable energies in both rural and urban areas. The government can explore the potentials of environment friendly solar power to address the problem greatly. This may contribute to the government's pledge to reach electricity to all by the year 2021.  
Works on several big power projects under government and private initiatives are going on. Rental power plants are also producing electricity to meet the demand. Those met the emergency situation. There was no alternative to these. Though the prices of electricity produced by rental power plants are comparatively higher, the entrepreneurs accepted the reality as those contributed to maintaining industrial production and spur on GDP growth.  

(The writer is a retired senior civil servant)

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