Tariff hike not silver bullet for Bangladesh power woes, say experts

They advocated for addressing capacity charges and transitioning to a competitive market for long-term viability.

The government plans to phase out power subsidies over three years, aligning with IMF requirements even as Nasrul Hamid hinted at a 4 per cent power tariff increase, marking a year since the last hike.

Energy expert Mohammad Hossain meanwhile suggested a phased 4-5 per cent increase to reduce subsidies by Taka15,000 crore even as Bangladesh Power Development Board (BPDB) data indicated that removing subsidies could result in a 78 per cent - 81 per cent price hike, prompting a gradual increase to ease the burden on the public.

Professor Sharesul Alam emphasised that tackling capacity charges alongside tariff adjustments is vital for sustainable solutions.

Finance ministry data reveals significant subsidies, with a substantial portion directed towards capacity charges.

Meanwhile, Nasrul Hamid highlighted substantial payments to power plants for capacity charges over the years even as former Bangladesh University of Engineering and Technology (BUET) professor Ijaz Hossain criticised the government’s subsidisation due to capacity mismanagement, predicting additional charges as capacity grows.

Energy expert Shamsul Alam urged the government to focus on curbing wasteful expenditures rather than increasing electricity rates, which could worsen inflationary pressures already affecting the public.

Inflation spiked to 9.86 per cent in January, with an average of 9.02 per cent in FY23, posing challenges for further price increase.

ALCHEMPro News Desk (DR)