THE increase in retail power price by Tk 1.52 a unit or a kilowatt-hour, or 16.68 per cent, as the Energy Regulatory Commission announced on June 3, coming into force on June 1, raises concern amidst fears of a further impact on the majority of people already hit hard by persistent inflation. The commission has also announced an increase in bulk power price and transmission charges, with the government struggling to contain growing subsidy payments. The bulk power price increases by 19.85 per cent to Tk 8.39 a unit from Tk 7 and the transmission charge increases to Tk 0.3886 a unit from Tk 0.3135. The concern is grave in that power prices have been increased after the Energy Division upwardly adjusted the prices of petrol, octane and kerosene by Tk 5 a litre on May 31 against the backdrop of the government’s decision to revive the stalled lending programme with the International Monetary Fund. Power prices were last increased by an executive order, effective from February 2024, when bulk prices increased by about 5 per cent and retail prices by about 8 per cent.
The increase in power prices entails a broad socio-economic impact. The price increase is feared to directly feed into higher inflation. Its ripple effect will add to utility costs, which will spill over into the retail market. The increase will erode the purchasing power of the people, already constrained by high goods prices. This will squeeze the household budgets of the vulnerable groups as lifeline consumers, using below 50 units a month, will need to pay Tk 5.32 instead of Tk 4.63 and of the middle class, using 301–400 units a month, as the people in this group will face a 19.95 per cent increase. The power price increase, together with the recent upward adjustment of fuel prices, may force trade-offs in nutrition, healthcare and education spending. And not only household consumers but also consumers of power for irrigation, cottage industries, educational institutions and commercial entities will face a heavy impact, with the 12-month average inflation, as the Bureau of Statistics records, at 8.59 per cent through April. The Consumers Association of Bangladesh says that the commission has put the burden of mismanagement, corruption, system loss and capacity charge on consumers as the government appears to be maintaining the costly power structure that the fallen Awami League government had erected during its rule for a decade and a half.
The commission chair, who admits that the prices have been increased without assessing the impact on consumers and the economy, says that scope remains for impact assessment and that the increase would not be required if the government could produce electricity from less expensive plants and make available renewable energy sources. The government should, therefore, treat the power sector malaise before it further increases the prices.
