Proposal to Raise Electricity Prices
The government is moving to increase electricity tariffs following a recent hike in fuel prices, with a proposal now under review by regulators.
According to sources at the Bangladesh Energy Regulatory Commission, the Bangladesh Power Development Board has proposed raising wholesale electricity tariffs by Tk 1.20 to Tk 1.50 per unit. Given an annual supply of around 90 billion units, such an increase could generate over Tk 100 billion to Tk 135 billion in additional revenue. Retail electricity prices may rise proportionately by as much as Tk 1.38 per unit.
The proposal, which follows policy-level approval from the Power Division, suggests a 17 to 21 percent increase in wholesale tariffs. In response, BERC has formed a technical committee to examine the proposal and assess its justification.
BERC Chairman Jalal Ahmed said that retail prices are typically adjusted in line with wholesale rates. One of the country’s five distribution companies has already submitted its proposal, while the remaining companies are expected to follow shortly.
Under BERC regulations, all proposals will be reviewed by the technical committee before a public hearing is held with stakeholders. A final decision on tariff adjustments will be made based on the findings, taking into account the sector’s revenue shortfall and the government’s subsidy commitments.
Currently, BPDB purchases electricity from both public and private power plants at fixed contractual rates and sells it to six distribution companies at a government-set wholesale price that is below production cost. The resulting deficit is covered by government subsidies. Distribution companies, however, operate without subsidies and earn profits by selling electricity to consumers at retail rates.
The most recent price adjustment took place in February 2024 through an executive order, raising wholesale tariffs by 5 percent and retail prices by an average of 8 percent. At present, the average retail tariff stands at Tk 8.95 per unit, while the wholesale rate is Tk 7.04.
On Tuesday, the Northern Electricity Supply Company submitted its proposal for retail tariff adjustments. Meanwhile, the Power Grid Company of Bangladesh has proposed increasing transmission charges by Tk 0.16 per unit for delivering electricity from power plants to distribution companies.
BPDB noted that about 63 percent of consumers are low users, consuming less than 75 units per month. The proposal aims to keep tariffs unchanged for this group, while higher rates may be applied to larger consumers—meaning roughly 37 percent of users could see increased bills.
Global energy markets remain volatile due to ongoing conflicts in the Middle East, which have driven fuel prices to more than double. This has significantly increased costs in Bangladesh’s power and energy sector.
To address the growing deficit, the government raised fuel prices through an executive order on April 18. Earlier, on April 9, a high-level cabinet committee led by the finance minister was formed to review electricity and fuel pricing.
During the previous Awami League government, special legislation allowed the construction of multiple power plants without competitive bidding, resulting in high capacity payments. Despite this, power generation often remains below half of installed capacity due to fuel shortages.
Over the past 15 years, electricity tariffs have been increased 12 times at the wholesale level and 14 times at the retail level. Although the interim government initially sought to reduce costs instead of raising tariffs and restored pricing authority to BERC, those measures have had limited impact. In the last fiscal year, subsidies reached a record Tk 580 billion.
Energy adviser M Shamsul Alam from the Consumers Association of Bangladesh criticized the reliance on price hikes to address deficits. He argued that nearly 40 percent of power generation costs are excessive and could be reduced, warning that without structural reforms, increasing tariffs will not provide a sustainable solution.
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