[ALOCHONA] Consumers to pay through the nose for power

Consumers to pay through the nose for power

Manjurul Ahsan Courtesy New Age 10/04/11

Consumers will have to bear the brunt of the high-cost electricity generation by recently installed and soon-to-be-installed plants in the private sector, with the power distribution agencies already moving for raising the power tariff at consumer level, prompted by the price hike of bulk power in February this year by the Energy Regulatory Commission.

The most troubling news for the consumers is that the power price curve is sure to rise at a very steep pitch and at least for three successive years but no one knows when, where, and how this upward trajectory of price will end and stabilise at a sustainable level.

Officials concerned said the ERC, which increased the bulk rate of power in February, would go for a sharp price hike of electricity at the consumer end by August. The upward revision of bulk power price has already forced the Rural Electrification Board to submit a proposal to the commission for raising the power tariff at the consumer level, while the rest of the power distribution agencies are preparing to follow in the REB footsteps.

The ERC on February 8 increased the average bulk rate of power by 18.14 per cent to be enforced in two phases – an 11 per cent rise from February in the first and a 6.66 per cent hike from August in the second phase. And the Power Development Board will then sell electricity to the five distribution agencies for Tk 2.8 per unit (kilowatt-hour) since August 1, up from the existing Tk 2.37 unit price, until January 2012.

The ERC in February also asked the government to provide a Tk 1,500 crore subsidy to the PDB to help it break even.

According to officials and experts in the sector, the power generation cost has shooting skyward mainly due to the commissioning of a number of expensive fuel-oil-driven power plants from the private sector.

Anu Mohammad, member secretary of the national

committee to protect oil, gas, mineral resources, power, and port, blamed the government's privatisation policy for the power and energy sectors of implementing fuel-oil-driven power projects for the exorbitant price spike.

According to the PDB data, the net power generation cost has risen by 35 per cent from Tk 2.37 per unit in fiscal year 2009-10 to Tk 3.20 per unit in FY2010-11.

The PDB will have to pay Tk 4.26 for a unit of power by FY2012-13, when 63 per cent of the new electricity will come from the private-sector plants, including the fuel-oil-driven ones.

PDB general manager Abduhu Ruhullah told New Age that the board would have to raise the bulk rate of electricity for three successive years in order to break even.

Officials of the power distribution agencies said the consequence of the bulk rate hike of electricity would force them to increase the retail power price to bring a balance between the supply cost and revenues.

The REB on Thursday submitted its proposal to the ERC for making a 12.97 per cent increase in the average retail tariff of power sold by the 70 Palli Bidyut Samitis under the board to consumers.

West Zone Power Distribution Company is set to place its proposal before the ERC for raising the power price at the consumer level by about 13 per cent within the next two weeks, said an official of the company.

Officials of the PDB, Dhaka Power Distribution Company, and Dhaka Electricity Supply Company told New Age that they were currently operating at a loss as the supply cost of power to the consumers was higher than the proceeds of the sale.

DESCO finance director Kudrat E Khuda told New Age that the Dhaka-based power distribution company had started to count losses since the price hike of bulk power in February.

The amount of loss will inflate further when the bulk rate will see another rise in August this year, he said.

Kudrat said the DESCO would submit its proposal for power price hike at the consumer level within a month.

Economist Anu Mohammad said the living cost would increase, if the power generation cost rose, regardless of whether the government raised the power tariff at the consumer level or gave subsidy.

He said farmers, local entrepreneurs, and the low-income group would be affected the most in the forthcoming days.

According to the PDB data, out of the total 2,800MW of power that the board now buys from the private sector, about 770MW of power comes from the fuel-oil-fired rental plants. Around 1,500MW of electricity is now generated in the public sector.

Generation of an additional 966MW of rental power is on the cards.

The government, moreover, has floated a tender for awarding contracts for setting up 30 power plants with a combined capacity of 4,606MW in the private sector.

The government, at the same time, has awarded contacts for installing 15 power plants with a combined capacity of 1,564MW in the public sector. The power plants to be set up are mostly expensive to run and, so, will generate electricity only in the peak hours.

The government has floated tenders for installation of only five power plants of usual kind with a combined capacity of 1,060MW in the public sector.

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