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Retail Power Tariff, VAT Law

Power consumers may face double burden

  • Shamim Jahangir
  • 7th June, 2017 12:12:26 AM
  • Print news
Power consumers may face double burden

Power subscribers at different levels may face a double trouble next month as the power distributors and finance ministry proposed mobilising over Tk 7,000 crore through raising power tariff and VAT hike, officials said.

 

“We have already proposed raising retail and wholesales power tariff considering subsidy for the power sector,” Bangladesh Power Development Board (BPDB) chairman Khaled Mahmood told the daily sun.

 

Another official said the BPDB projected an additional Tk 3,500 crore in revenue by raising bulk level power tariff so that it can minimise loss.

 

Besides, another Tk 3,500 crore is likely to be earned by the National Board of Revenue (NBR) through the VAT hike. The proposed VAT will be 15 percent from the existing 5 percent.

 

The BPDB has already projected such additional revenue earning by evaluating the proposed VAT law, the official said.

 

According to the BPDB, consumers would have to pay an extra Tk 0.67 per unit, subject to the new VAT law from July, 2017. The power tariff is now Tk 6.92 per unit considering 5 percent VAT and the billing rate is Tk 6.73 per unit.

 

“It’s a double burden on us as the gas tariff has already been hiked and power tariff may rise immediately,” Shahdat Hossain, a landlord of Bashundhara Residential area, told daily sun.

 

Arshi, a domestic help, requested her master to raise wage due to the rising cost of living. “My house owner has already served notice to increase house rent as the gas prices increased significantly,” she said.

 

“The power distribution companies have submitted proposals to raise power prices and we are evaluating the proposals,” Bangladesh Energy Regulatory Commission (BERC) chairman Monowar Islam told daily sun.

 

The BPDB sent a proposal to Bangladesh Energy Regulatory Commission (BERC) asking it to increase the retail price of electricity by Tk 1.05 per unit (kilowatt-hour).

 

“We have proposed increasing the retail power tariff to Tk 7.78 from Tk 6.73,” an official said.

 

The official said the BPDB has been incurring huge losses by purchasing electricity from costly rental and quick rental power plants. “We are seeking budgetary support in this regard. The power sector will get a subsidy of Tk 5,500 crore, which is the same as allocated in the current FY,” the official confirmed.

 

The BPDB will require 29 percent bulk tariff hike to reach a breakeven point, the BPDB official said, adding, “We have proposed a 14.5 percent bulk tariff to mobilise Tk 3,500 for compensation on costly power purchase.”

 

Besides, another Tk 300- Tk 350 crore may be mobilised for increasing 12.5 percent retail tariff hike, he added.

 

The Rural Electrification Board of Bangladesh sought a 7.08 percent rise while West-Zone Power Distribution Company Ltd asked for 10.76 percent rise, Dhaka Power Distribution Company Ltd for 8.86 percent rise, and Dhaka Electric Supply Company Ltd (DESCO) asked for 8.35 percent hike in retail tariff.

 

Bangladesh Rural Electrification Board also admitted submitting the tariff hike proposal recently.

 

Consumers Association of Bangladesh (CAB) Energy Adviser Prof M Shamsul Alam said there is no requirement to raise power tariff.

 

Terming the power tariff hike proposal ‘illegal one’, he said the oil prices fall on the international market.

 

The BPDB spent Tk 34,240 million last year to buy gas and oil for electricity generation.