Power consumers have started bearing the brunt of the government’s quick fix policy for increasing electricity generation by fuel oil-fired rental plants by paying about 60 per cent more than what they spent before March 2010.
The average retail price of electricity has been increased to Tk 6 a unit a kilowatt-hour (unit) from Tk 3.76 in six phases since March 2010.
In 2010, Bangladesh Energy Regulatory Commission raised the price by about Tk 0.24 a unit at one go, in 2011 by Tk 1.02 a unit in two phases and in 2012 by about Tk 1 a unit in three phases.
The commission has doubled the bulk power prices, from Tk 2.37 a unit to Tk 4.70 a unit, in six phases since February 2011.
The average power generation cost has more than doubled – from Tk 2.59 a kilowatt-hour (unit) to Tk 5.57 a unit – for an increase in power generation by 47 per cent in last four years.
Besides, the government annual subsidy in power generation has been increased more than four times – from Tk 900 crore to Tk 3,850 crore. The amount would cross Tk 7,000 crore for the current fiscal to increase power generation from rental plants during boro season, a power division official said.
The government went for expensive and short-term projects instead of exploring low-cost ways like re-powering of the old public sector plants to increase power generation as well as save gas in the inefficient plants.
The increased subsidy in power sector has caused mounting budgetary pressure forcing the government to hold back the growth in budgetary allocation for other infrastructural development and social sectors like health and education, experts said.
The situation is likely to worsen in coming years as the government has failed to install the low-cost big power plants, particularly those run by gas, in its four years in office, forcing the Power Development Board to be more dependent on expensive rental plants.
The prime minister’s energy adviser Tawfiq-e-Elahi Chowdhury sought to justify the situation by saying that the government had no option but to go for costly means to increase power generation in a short time. He said that the government had doubled power generation in four years.
But, power expert Shamsul Alam said that the government had increased base-level of power price on various pretexts so that business became more profitable for private companies.
Private sector has started dominating power generation by supplying 56.72 per cent electricity to the national grid in 2011-12 financial year, from 41.68 per cent in the 2009-10 financial year.
According to the government’s mega plan, the contribution of the private sector to electricity generation would hit 62 per cent by 2016.
In order to achieve the goal, the government has so far signed 58 contracts for installation of 60 power plants with a combined generation capacity of more than 8,000mw. Out of the 60 projects, private entrepreneurs got 39 with a combined generation capacity of more than 5,000mw.
Thirty-two power plants with 2,751mw generation capacity have been installed, of which 20 plants with 1,653mw capacity have been installed by the private sector.
PDB extended seven contracts with rental power producers for purchase of electricity for one to two years under a special act.
Earlier, under the same act, the PDB signed 15 contracts to buy power from 17 quick rental plants with a combined generation capacity of 1,388mw for three to five years at up to Tk 20 a unit. The government has awarded six more projects with a combined capacity of 350mw to the private sector to buy electricity for 15 years.
The government on September 17 extended effectiveness of the Speedy Supply of Power and Energy (Special Provision) Act, 2010 by two more years so that it could award projects without tender.
Officials said that implementation of most of the large projects were hindered mainly by fund crisis.
Even the government’s move for privatisation of the sector for solving investment problem did not succeed in terms of project implementation in expected time, officials said.
Economists said that the rise in power tariff had fuelled inflation which would continue for long increasing the production cost of industrial and agricultural produces with a cascading impact on cost of living.
Bangladesh Institute of Development Studies research director Zaid Bakht told New Age that lower- and middle-income groups and the small- and medium-industries were suffering the most.
Centre for Policy Dialogue fellow Debapriya Bhattacharya expressed a similar view saying that the consumer price index had come down in recent years indicating a fall in purchasing capacity.
Even heavy industries were losing their competitiveness in the global markets for frequent rise in power tariff.
The Energy Commission has increased the prices for domestic consumers with a monthly consumption of up to 100 or 75 units by Tk 0.81 a unit, from Tk 2.50 to Tk 3.31 a unit under four utilities except the Rural Electrification Board, and for domestic consumers with a monthly consumption of up to 400 units by Tk 1.78 a unit, from Tk 3.15 to Tk 4.93 a unit.
Among other consumers, the rise in retail prices were Tk 0.58 a unit –  from Tk 1.93 to Tk 2.51 a unit – for irrigation pumps, Tk 2.94 a unit – from Tk 4.02 to Tk 6.95 – for small industries, Tk 3.01 a unit – from Tk 3.80 to Tk 6.81 – for medium industries drawing power from a 11kv line, Tk 2.90 a unit – from Tk 3.58 to Tk 6.48 – for heavy industries taking power from a 33kv line, Tk 3.34 a unit – from Tk 2.82 to Tk 6.16 – for heavy industries drawing power from a 132kv line and Tk 3.70 a unit – from Tk 5.30 to Tk 9.0 – for commercial consumers.   
The prices of electricity fixed for most of the categories of the REB consumers are much higher than that of the consumers under other utilities.
Among the political parties, only left-democratic groups have consistently protested at the frequent price hike of electricity in last four years.
Experts said the government could have increased power generation by more than 2,000mw in three years from the old gas-fired plants in the public sector. Such electricity would cost the power board less than Tk 1.50 a unit.
Out of 11 public sector low-cost power projects, nine with 1,700mw capacity, which were scheduled for installation by 2012, are expected to be delayed by up to two years.
Among private-sector power plants, the Power Division has deferred implementation of two other plants with 150MW capacity each by a year although they were scheduled to be set up by 2012.
Similarly, of the six big plants in the private sector which were expected to be installed by the next year, the deadline for four plants with 1,000mw capacity has been deferred by up to two years.
The installation of three other private-sector plants with a combined generation capacity of more than 1,000MW is still uncertain although they are supposed to be completed by January 2013.
The percentage of the population brought under power grid connectivity after the present government took office has increased to 53 per cent from 48 per cent in 2009.