Power subsidy may hit new record in current FY

It crosses Tk 46bn till Jan

Shamim Jahangir

7 April, 2019 12:00 AM printer

Country’s power subsidy may hit a new record in the current fiscal year, thanks to a rise in electricity generation from liquid fuel-based power plants, officials said. 

The government has already spent about Tk 4,618.86 crore (46.18 billion) on power subsidies in the first seven months of the current fiscal year mainly due to purchase of costly electricity from rental and quick rental power plants.

The amount of subsidy was Tk 42 billion in the last fiscal year, official sources said.   

“Our electricity generation has increased significantly from liquid fuel-based power plants and we are providing Tk 1.42 subsidy for a unit now considering Tk 4.84 in bulk tariff,” power division senior secretary Dr Ahmad Kaikaus told the daily sun on Saturday.

He said the subsidy will go up remarkably as the liquid fuel-based electricity generation increased significantly in the last one year.  He said per unit from the liquid fuel-based power is 10-11 US cents whereas the imported electricity is 8 cents on an average.

“We have proposed that the energy and mineral resources division should supply 1300mmcfd of natural gas to increase low-cost electricity from gas-fired plants,” he said.

He said Bangladesh Power Development Board (BPDB) will not need to increase power tariff if the government can ensure available gas supply with limited hike of natural gas tariff for electricity as per the power division proposal.

“We have already submitted our proposal to Bangladesh Energy Regulatory Commission (BERC) in this regard,” he said.           

According to ministry sources, government’s budgetary allocation for power subsidy is Tk 5,500. 

But, the power division will require additional subsidy considering the last seven months’ subsidy till January, 2019.

Power tariff from the gas-fired power plants ranges between Tk 2.0-3.5 per unit, but it costs between Tk 13 and Tk 23 per unit from the oil-fired rental plants.

During July-October period in 2018, BPDB incurred a loss of Tk 3283.09 crore by selling electricity at subsidised rates largely due to costly power purchase from rental, quick rental and import of electricity from India. From November, 2018 to January, 2019, the government incurred losses of Tk 1335.77 crore. 

Taking the advantage of the government’s dependence on private power plants, the owners of the rental and quick rental power plants have been pushing for extension of the tenure of costly plants by 10 to 15 years from short-term plants.

Meanwhile, BPDB secretary Saiful Islam Azad has sought Tk 1335.77 crore as subsidy for the month of November-January to help state-owned BPDB to cope with the losses for costly electricity purchase. BPDB has already received Tk 3283.09 crore as subsidy during the July-October period last year.