Power prices to rise from Tk 7.04 to 12.04 per unit

Plan presented to IMF

Mahfuz Emran: The Power Development Board (PDB) is losing an average of Tk 3,600 crore by selling electricity every month. More than Tk 43 thousand crores of subsidy is needed in the current financial year to meet this shortfall. However, the Ministry of Finance has allocated Tk 35 thousand crores. Besides, there is another Tk 30,737 crores of outstanding subsidy from the last financial year. As a result, it is not possible to meet the deficit of PDB through subsidy. For this reason, a plan has been taken to increase the price of electricity 11 times and eliminate the subsidy.
The government wants to get out of this as the subsidy pressure has been increasing for the past few years. International Monetary Fund (IMF) loans are also conditional on reducing subsidies to zero. For this, the electricity department has taken a medium-term plan. This plan was presented recently in a meeting with the IMF. It was informed in the meeting that the price of electricity will be increased 11 times till January 2027 to meet the deficit. However, electricity prices will be hiked not during summer, but during winter, especially from November to February. In this case, it has been proposed to increase the price at the rate of five percent each time.
According to sources, the increase in electricity prices increases the cost of the people. It also contributes to inflation. Average electricity consumption naturally increases in summer. If the price of electricity is increased at that time, it will greatly increase the cost of the customer. Basically,considering the cost pressure of the customer, the plan has been taken to increase the price of electricity in winter instead of summer. It will increase the cost comparatively less in winter. Inflation will also not have much of a negative impact.
In a meeting with the IMF, it was informed that the price of bulk electricity was increased by an average of five percent last February. In this, the price of bulk electricity is falling on a weighted average of Tk 7.04. Although at present the bulk supply price of electricity per unit is around Tk 11.96. In other words, PDB’s loss per unit of electricity sales is Tk 4.92.
On the other hand, the price of electricity at the consumer level has been increased by 8.48 percent on an average in February. In this, the retail price of electricity falls on a weighted average of Tk 8.95. Besides, demand charges and other service fees have been increased by an average of 20 percent in February. In this, the shortage of electricity distribution companies has been almost fulfilled. However, to meet the shortfall in bulk PDB, electricity prices should be increased at half-term (one and a half months) or quarterly (three months) or six-monthly (six months) intervals at the bulk and proportionally at the consumer level.
A plan in this regard was also presented to the IMF. It can be seen that the average price of bulk electricity will increase by five percent or 35 paise next November. It will cost a weighted average of Tk 7.39 per unit of bulk electricity. In December, it will increase by five percent or 37 paise. In this, the price of bulk electricity per unit will be a weighted average of Tk 7.76.
Prices will increase by five percent in January and February next year. This will increase the price of bulk electricity by a weighted average of 39 paisa in January and 41 paisa in February. In those two months, the price of bulk electricity per unit will increase by a weighted average of Tk 8.15 and Tk 8.56 respectively. After that, the price will not increase from March to October.
In November next year, the average price of bulk electricity will again increase by five percent or 43 paise. In this, the price of bulk electricity per unit will be a weighted average of Tk 8.99. In December of the same year, it will increase by more five percent or 44 paise. In this, the price of bulk electricity per unit will be weighted average Tk 9.43.
Next year i.e. in January and February 2026, the price of bulk electricity will increase at the rate of five percent. This will increase the price of bulk electricity by 48 paisa weighted average in January and 49 paisa in February. In those two months, the price of bulk electricity per unit will increase by a weighted average of Tk 9.91 and Tk 10.40 respectively. After that, the price will not increase from March to October. The average price of bulk electricity will increase by 5 percent in November and December that year. The price will increase by 52 paisa in November and 55 paisa in December. In November 2026, the weighted average price per unit of bulk electricity will be Tk 10.92 and in December Tk 11.47. And in January 2027, the price of bulk electricity will increase by five percent or 57 paise. In January, the price of bulk electricity will rise to a weighted average of Tk 12.04.
Even if the cost of power generation is slightly higher than the existing rate, the subsidy in this sector will come down to zero as a result of the 11-point increase of five rupees.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid gave such a glimpse to journalists last February. At that time, he said, electricity is now sold at a much lower price than the cost of production. Prices are being adjusted to meet the shortage. The prices will be adjusted in a phased manner over the next three years. Through this, the subsidy in the power sector will be reduced.
However, experts blame the wrong planning of the government for the high subsidy in the power sector. In this context, Cab’s energy advisor Professor M Shamsul Alam told that it is possible to reduce the cost of power generation through efficient management and proper planning rather than increasing the price to reduce the subsidy. He said, there was an alternative. In the eyes of the law, it would have been necessary to prevent unjust and unreasonable expenditure increase. The government did not follow that path. Increasing the price of electricity from time to time is oppression on the consumer.
Professor Shamsul Alam also said that they do not ask the consumers while increasing the price of electricity. Bangladesh Energy Regulatory Act is in force. If the price is increased through public hearing, the people would know what the government has spent in which sector, why the government has to give subsidy. During the public hearing, CAB has repeatedly identified areas of unnecessary expenditure. Cab also suggested that if they are removed, instead of increasing the price, it can be reduced. But it was never taken into consideration by the government. Rather, the cost burden has been placed on the shoulders of the people through simple price hikes.