Gazette notification issued to raise 8.50 percent power tariff at retail level

After announcing bulk tariff hike by 5 percent, the government issued the gazette notification to raise power tariff at retail level on Thursday.

As per the gazette notification, at the retail level, per unit of electricity (each kilowatt hour) will increase by an average Tk 0.70 (8.50%) to Tk 8.95 per unit from existing Tk 8.25.

On the other hand, the life line subscribers will see a hike by Tk 0.28  per unit from Tk 4.35 to Tk 4.63.

The new tariff will be effective retroactively from February 1.

There are 1.65 crore “life line consumers”, said the Ministry of Power, Energy and Mineral Resources giving a clarification to the latest tariff hike for thd retail consumers.

Earlier, the government announced the new power tariff for bulk consumers raising it by 5 percent from existing Tk 6.70 per unit to Tk 7.04 meaning a rise of Tk 0.34 per unit (each kilowatt hour) with effect from February 1.

The bulk consumers are mainly the distribution entities and large industries that receive electricity at 33 kV, 132 kV and 230 kV transmission lines directly from the single buyer and principal organization in the power sector, the Bangladesh Power Development Board (BPDB).

There are six distribution entities—Bangladesh Rural Electrification Board (BREB), Dhaka Power Distribution Company Limited (DPDC), Dhaka Electric Supply Company Limited (Desco), Northern Electricity Supply Company PLS (Nesco), West Zone Power Distribution Company Limited (WZPDCL) and also BPDB, which is itself involved in power distribution.

As per a gazette notification, dated February 29, the distribution entities will purchase electricity from BPDB at Tk 8.44 per unit electricity at 230 kV, Tk 8.47 at 132 kV and Tk 7.62 at 33 kV level.

Besides, a separate gazette notification was also issued raising the transmission charge as well for the entities.

Earlier, State Minister for Power, Energy and Mineral Resources Nasrul Hamid at a press briefing said that the power tariff will be increased from February 1 instead of March 1, on Thursday (February 29, 2024) - meaning the new rates will come into effect retroactively, to cover February bills as well. 

However, two days before, he had said the new tariff would come into effect from March 1.

He said the power tariff would be hiked between Tk 0.34 (5 percent) and Tk 0.70 per unit (8.5 percent) for all kinds of consumers depending on their consumption volume while gas price will go up by Tk 0.75 per unit only for power plants. 

He also said that dynamic fuel pricing will be introduced for the consumers from March 1 under which the price of petroleum fuel will go up and down in line with international market prices.

“Each month fuel price will be declared for the consumers," he said adding neighbouring India does this every day.

He noted that the steps have been taken to minimise the government losses caused by the increase in the dollar rate. “This year the government will incur a loss of Tk 43,000 crore due to the sale of electricity at a lower price,” he said.

This step has been taken as part of the government‍‍`s move to come out of the subsidy now being given to the power sector, said the minister.

According to the BPDB’s Annual Report 2022-23, the fiscal year saw the production of 87,024 million kilowatt hours of electricity at a total cost of TK 98,646 crore. 

Its per unit production cost was Tk 11.33, while it was selling electricity at Tk 6.7 per unit — incurring a loss of about Tk 4.63 per unit.

This imbalance has led to a staggering loss of Tk 47,788 crore for the fiscal year, as the government grapples with purchasing power from private and international sources at significantly higher rates.

With this huge loss, the government has been facing great trouble as it has to purchase electricity worth Tk 82,778 crore from private sector power producers, while it generates electricity worth Tk 13,307 crore from its generation plants.

The annual report also shows that the BPDB’s average per unit production cost from its plants is Tk 7.63. At the same time, it is Tk 14.62 at the independent power producers or IPPs (private sector), at rental plants Tk 12.53, at public plants Tk 6.85, and imported power from India at Tk 8.77.

The government purchases electricity from the private sector and India in dollars.