An announcement of 5 percent increase in electricity prices may come in this month itself. The government is going to take this initiative to deal with the pressure of subsidy given to the power sector. This information is known from the sources of Ministry of Finance and Electricity Department.
According to sources, three thousand crores of subsidy has been given to the power sector in three months. Earlier in the same period subsidy was given 1500 crores. During the last November-January period, 2 thousand 968 crore rupees have been released from the finance department for the subsidy in the power sector. This is the first time that this money has been given from the budget of the current fiscal year 2022-2023. In this regard, in the last 12 months (February 2021 to January 2022), subsidy on electricity has been discounted to the tune of 15 thousand 805 crores. Most of this money has been given to private power plants. Basically this amount is given as capacity charge.
According to sources, in the budget of the last fiscal year 2021-2022, 9 thousand crore rupees were allocated for subsidy in the power sector. Later, in the revised budget, the amount of subsidy was increased by 3000 crores to 12000 crores. But even then it was not possible to fix the subsidy within this limit. On the other hand, in the current fiscal year 2022-2023, 17 thousand crore rupees have been allocated for subsidy in the power sector.
According to sources, the price of furnace oil has increased by 300 percent in the international market. Furnace oil is bought at a higher price but the government is selling it to power producers at a lower price. On the other hand, it is not possible to adjust the subsidy without increasing the price of electricity. As a result, the amount of government subsidy in the power sector is gradually increasing. At the same time, a huge amount of subsidy money is being spent on private power plants, keeping them up.
According to sources, it has been proposed to increase the price of electricity by 5 percent at the wholesale level to cope with the pressure of subsidy. However, no proposal has been made to increase the prices at the retail level. But analysts say prices will rise at the retail level as well. Because marketing companies will not buy at higher prices and sell at lower prices. In the last 11 years, electricity prices have been increased by 116 percent at the wholesale level. At this stage, the customer level has increased to 90 percent. Currently wholesale electricity price is 5 taka 17 paisa per kilowatt hour. The government is subsidizing another 3 rupees 39 paise. Bangladesh has created a new crisis with more power plants and production capacity than required. Analysts attributed this mainly to lack of proper planning.
Currently, the number of power plants in the country is 152. Generally half the power plants are sitting idle. The US-based research institute Institute for Energy Economics Financial Analysis (IEEFA) said in a report that 57 percent of the power plants in the country are left idle and rented out. But now, due to the increase in the price of LNG, most of these oil-based power plants are not producing electricity. As a result, 3 to 5 hours of load shedding is being done day and night in the country. But this load-shedding situation is worse in villages.
According to the sources, 5 thousand 173 crore rupees have been requested from the Finance Department for waiving the electricity subsidy amount till November 2021, December 2021 and January 2022. Out of this, 1 thousand 345 crores have been requested for the month of November. 1,623 crore for December and 2,205 crore for January. Of this, 3 thousand crore rupees have been exempted.
It may be noted that the subsidy amount is given to the Power Development Board (BUBO) every three months. In the last 11 years, about 75 thousand crores of subsidy has to be paid in the power sector.
Meanwhile, the private research institute Center for Policy Dialogue-CPD recently mentioned in a report that most of the subsidies given by the government every year are given to the power and energy sector. It is increasing every year. For example, in 2016-2017, 53 percent of the total subsidy was given to the power and energy sector. In the financial year 2021-2022, 80 percent of the subsidy is being used in this sector.