The government is considering adjusting the liquid fuel tariff in the local market as the rates have come down in the international market.
State Minister for Power and Energy Nasrul Hamid informed this at a dialogue on Monday.
Nasrul Hamid said the government installed several coal-fired power projects when the coal import tariff was $60 per tonne.
“But the tariff has now increased to $450 per tonne. In the same way, the natural gas tariff increased to $67 per mmbtu in the spot market due to the Russia-Ukraine war,” he said.
While describing the pressure in the economy, the state minister said, “The liquid fuel tariff also increased to $140-$160.”
He said, “Despite the volatile energy market, the government didn’t raise the tariff considering the market base. Now, we are going to do downward adjustment of liquid fuel tariff following the international market.”
FERB chairman Md. Shamim Jahangir presided over the dialogue.
The discussion was attended by Bangladesh Independent Power Producers Association (BIPPA) president Faisal Khan, energy expert Prof. Ijaz Hossain, former member of Bangladesh Energy Regulatory Commission (BERC) Md. Maqbul-E-Elahi Chowdhury, IEEFA's energy finance analyst for Bangladesh Shafiqul Alam, Power Cell director general Mohammed Hossain.
FERB executive director Rishan Nasrullah moderated the dialogue with BIPPA vice president Mozammel Hossain presenting the keynote paper.
Nasrul Hamid urged the private power producers to “keep patience about the outstanding bills of private power generation.”
In the keynote paper, BIPPA vice president Mozammel Hossain said the BPDB was yet to pay a due of Tk 180 billion as of March to the private power producers.
He called upon the government to introduce unified taxes for HFO, LNG and coal imports.
Responding to the BIPPA demand, State Minister for Power and Energy Nasrul Hamid said the ministry already forwarded a proposal to the National Board of Revenue (NBR) in this regard.
He also said the ministry also requested the board to solve the dispute on HS codes.
BIPPA president Faisal Khan said, “We are in pressure and in trouble due to the fund crisis. So, realising the outstanding payment of Tk 180 billion may save the private power sector.”
He said, “I expect the budget will reflect the realities of the energy and power sector.”
“We require our long overdue bills to be paid to enable sustainable generation of electricity. I also hope the budget provisions will encourage efficient utilisation of the limited primary energy in the country,” BIPPA president emphasised.
According to him, customs duty on energy imports should be unified to realise the actual marginal cost of generation.
IEEFA's energy finance analyst for Bangladesh Shafiqul Alam said, the government did well over the last decade in enhancing installed power generation capacity.
“It's indeed an achievement to attain 100 percent access to electricity,” he said, adding that The private power producers played an important role in that regard.
“However, the geopolitical crisis leading to fossil fuel price volatility has significantly affected Bangladesh's power sector. Demand for electricity has not increased as expected,” Shafiqul Alam observed.
“The upcoming budget could be an important stepping stone to make the power and energy sectors sustainable,” he said.
Alam called for initiatives to utilise 2,000 to 3,000 MW solar power during daytime.
“This will help reduce BPDB's power generation cost and reduce revenue shortfall.”
He suggested that rooftop solar would be a viable option as there was a scarcity of land.
The energy finance expert said, “Import duties on solar accessories should be waived to encourage industries to quickly ramp up rooftop solar capacity.”
He said, “Regarding the uniform taxation of fuels, the government could take the step that would ensure the least-cost electricity without putting additional pressure on consumers.”
“To enhance industrial productivity, Bangladesh will need to provide affordable electricity,” the expert observed.
Former BERC member Md. Maqbul-E-Elahi Chowdhury suggested ensuring primary energy by drilling more wells onshore. Energy expert Prof. Ijaz Hossain called for an equal tax for fuel import.
He urged the government to conduct more drilling to lower the cost of energy.
State Minister for Power and Energy Nasrul Hamid, however, said the government targeted to produce additional 400-500 mmcfd of natural gas from local gas fields in 2-3 years. He said the government would need around $180 billion for power and energy infrastructure development.
The state minister called upon the private sector and donor agencies to provide their support in this matter.
