Wednesday, 6 July, 2022

Bulk Power Tariff Hearing: BERC to find sources for power subsidy

BPDB seeks to set bulk power tariff at Tk 8.58 per unit

Bangladesh Energy Regulatory Commission (BERC) will hold hearing today on the proposed power tariff and find sources of subsidy.

Power Division sought waiver of 34 percent VAT on import of HFO to reduce the cost of electricity generation.

“I didn’t find the sources of subsidy in the previous report of the commission to make a comfortable tariff adjustment,” BERC chairman Md Abdul Jalil told the daily sun yesterday.

He said Bangladesh Power Development Board (BPDB) sought Tk 8.58 as per unit bulk power tariff.

According to a BERC source, the regulator sent a letter to the Power Division seeking clarification about the subsidy for power generation in fiscal year 2021-22.

In a letter to BERC, the BPDB said they received Tk 64.35 as subsidy till March, 2022.

The BERC asked the Power Division to let the regulator know that whether they would get subsidy or not for the remaining three months of the fiscal year. BERC secretary Md Khalilur Rahman issued a letter to Power Division in this regard on May 11, 2022.

According to BERC, the regulator fixed the bulk power tariff at Tk 5.17 whereas the subsidy of the per unit power was fixed at Tk 0.47.

BPDB already informed the Power Division that 34 percent of VAT on imported furnace oil and the heated international energy market may push the subsidy to Tk 248.77 billion in the current fiscal year.

The government allocated Tk 90 billion in the current fiscal year.

“I have already requested the Ministry of Finance to cut down the VAT and other duties on imported fuels as the cost affects the power tariff,” State Minister for Power and Energy Nasrul Hamid told the Daily Sun.

He said the electricity production cost will come down significantly through adjustment of VAT and duty structures on furnace oil during the crisis period.

BPDB has yet to pay Tk 160 billion electricity bills from November, 2021 to February, 2022, another official said.

Recently, BPDB sought to withdraw import duties and 34 percent of Value Added Tax (VAT) on imported furnace oil for electricity generation.

HFO tariff increased to $750 per tonne now, which was around $200 per tonne in January 2020, said an importer of a private power generation company.

He added the cost of per kilowatt electricity generation rose to Tk 16-18 due to the rise of HFO market prices.

According to BPDB, Bangladesh’s electricity generation capacity is now 21,484MW. Of it, HFO-based power projects contribute 27.39 percent or 5884MW.

BPDB depends more on HFO-based electricity generation due to gas crisis and volatility in the international market.

According to the BPDB data, it produced maximum 5,004 MW of electricity against the total production of 14,782 MW of electricity in April 16, 2022. It means 33.85 percent of electricity comes from HFO one.

According to finance ministry sources, the government has a plan to set Tk 180 billion for power subsidy in the next fiscal year 2022-23, which is double than the current fiscal year.

The government also has a plan to raise subsidy on LNG and oil imports by 68 percent to Tk 173 billion.