Electricity price will increase 12 times in next 3 years

Zarif Mahmud: The government will adjust the price of electricity four times a year to deal with the pressure of subsidy. Over the next three years, the total subsidy to the power sector will be reduced in this process.
During this period, a total of 12 phases will bring the price of electricity at or near the cost of production. The power department of the government told this to the International Monetary Fund (IMF) delegation visiting Dhaka.The IMF delegation held a meeting with the power department at the secretariat on Thursday.
According to the sources of the meeting, the matter of electricity price adjustment to reduce subsidy. However, experts in the power sector say that the government has been giving subsidies to the power sector.
So, reducing subsidy in the name of price adjustment means increase in price of electricity. But the government can adjust the subsidy even while reducing the cost. The government is not focused on reducing the cost of electricity generation by curbing irregularities, corruption, wastage. Rather, even if there is no demand, they are increasing the cost of this sector by building one power plant after another without bidding.
Officials of the electricity department said that the price of electricity will be increased little by little, so that consumers do not get a sudden shock. Apart from this, the gas subsidy will also be gradually withdrawn, they said.
Officials also said that the IMF team wants to know how much money has been paid to independent power producers (IPPs) through outstanding bills and bonds. Meanwhile, Bangladesh Consumer Association (CAB) complained yesterday that the government is going to increase the price of electricity and other fuels to protect the interests of some unscrupulous traders. They also said that if the government stopped irregularities and corruption, there would be no need to give subsidies in this sector.
The CAB made a total of 13 recommendations, including a ban on non-competitive investment, so that the government does not have to raise prices. The IMF delegation arrived in Dhaka on April 23 for the review before the third tranche of the $4.7 billion loan.If the review is successful, the third installment of the loan will be available.
During a meeting with finance ministry officials, the IMF team asked the government to gradually reduce subsidies on electricity, gas and fertilizers. The government has raised electricity and gas prices several times since entering the IMF’s $4.7 billion loan program in January last year. Government subsidies on electricity, gas and fertilizers have almost doubled since FY 2022-23.The subsidy allocation in the budget of the current financial year is Tk 84,542 crores and almost the same amount may be allocated in the next year’s budget.
In the current financial year, the subsidy on electricity is about Tk 35 thousand crores and on gas about Tk 6,500 crores.Officials said that the finance department has given bonds and cash worth about Tk 19,000 crore to the power department in the current financial year.
But, till January, the amount of unpaid bills was around Tk 60 thousand crores. A senior official of the electricity department said that despite the increase in the price of electricity, a subsidy of Tk 7 to Tk 8 per unit of electricity has to be paid. He also said, ‘This is the main reason for the accumulation of unpaid bills.
This time the IMF mission wanted to know our plan to reduce the burden of non-payment and subsidy. The official said the government will withdraw subsidies for power and other energy sectors like fuel oil.The IMF delegation also wanted to know whether the Rooppur nuclear power plant would require any subsidy or not. The official said, “We have told them that the Rooppur plant will have lower per unit production cost and will not require any subsidy.”
Officials of the power department said that the first unit of the 2,400 MW Rooppur plant will start production next March. The IMF has been insisting on reducing subsidies in the power and energy sectors and channeling the money into social safety net programs. Finance department officials said that the IMF mission will conclude its visit with a joint meeting with finance department and Bangladesh Bank officials on May 6 and 7.