Electricity prices may rise by 15 to 20 percent; announcement on Wednesday

After the price hike of all types of fuel oil in April, transport fares have gone up. Fuel oil prices were raised again this month. Now, electricity prices are set to rise, too. The Bangladesh Energy Regulatory Commission (BERC) will announce the new rates tomorrow, Wednesday, which could become effective from this month itself. The general public is now worried about the rising cost of living.

Yesterday, Monday, BERC Chairman Jalal Ahmed told Agamir Somoy, "The commission's work is almost complete. I hope the new electricity rates will be announced soon." The Commission Chairman declined to comment on how much electricity prices might increase.

However, multiple officials, speaking on condition of anonymity, have indicated that wholesale prices could rise by around 19 to 20 percent, while at the consumer level, electricity prices might increase by 15 to 10 percent.

After the current government took office, discussions about raising electricity and fuel prices emerged, but the government's announcement was that prices would not be increased. However, when the fuel market became unstable due to the war in the Middle East, the government shifted from that position.

The government now says that fuel prices were raised out of necessity due to price increases in the international market. The reason for the electricity price hike is the increased production cost from importing high-priced fuel and the pressure of managing a mountain of subsidies. Additionally, the depreciation of the Taka against the US dollar and the construction of excess power plants compared to demand have further complicated the situation.

Experts and sector insiders attribute the electricity and fuel price hikes to various irregularities and corruption in the sector during the previous Awami League government's tenure, including unfair contracts, construction of excess power plants, huge capacity charges, and mismanagement.

They argue that if the substantial profits made by the Bangladesh Petroleum Corporation over 10 years when global prices were low had been adjusted, fuel prices would not need to be increased now.

According to them, while this step may slightly reduce the government's subsidy burden, it will increase the suffering of ordinary people. If electricity prices rise in the industrial and commercial sectors, production costs will also rise proportionally. The impact will directly fall on essential commodities. As a result, the cost of living for ordinary people in this inflationary market could become even more difficult.
"Artificial Shortage Created Through Looting and Unnecessary Expenses" — CAB Adviser

M. Shamsul Alam, energy adviser to the Consumers Association of Bangladesh (CAB), said: "An artificial shortage has been created in the power sector through looting and unnecessary expenditures. There is no scope for price adjustment based on this shortage. First, the real cause of the shortage must be identified, legality must be restored, and unnecessary expenses must be eliminated. Only then, if a genuine shortage exists, should a price hike be considered."

Rising Production Costs and Subsidies

According to BPDB data: In FY 2019–20, the average power production cost was Tk 2.13 per unit, in FY 2020–21, it rose to Tk 3.16 and by 2022, it reached around Tk 8.50.
Currently, the production cost has increased to nearly Tk 13 per unit, with a deficit of about Tk 6 per unit.

Meanwhile, due to rising production costs, government subsidies have been increasing steadily. To manage this pressure, the then Awami League government repeatedly raised electricity prices through executive orders, bypassing the Bangladesh Energy Regulatory Commission (BERC).

According to the Power Division’s estimates, the BPDB's projected deficit for the current fiscal year stands at Tk 62,964.64 crore. The revised budget allocated Tk 36,000 crore for the power sector, of which Tk 32,710 crore has already been released. Only Tk 3,289 crore remains. Beyond this, an additional Tk 15,247.78 crore will be needed for subsidies from April to June.

The Power Division also reported that the projected deficit for FY 2026–27 could reach Tk 65,554.87 crore. This includes an additional deficit of Tk 11,263.51 crore due to the recent hike in liquid fuel prices.

Excess Capacity and Capacity Charge Burden

Sector insiders note that while the country's peak electricity demand is around 18,000 megawatts, the installed generation capacity is nearly 29,000 megawatts. Maintaining a reserve margin would require only about 22,000 megawatts. Even without operating these surplus plants, the government has to pay substantial capacity charges, creating a major financial strain.

Consumers Oppose Price Hike

Political leaders, consumer rights activists, businessmen, and industrial entrepreneurs who took part in public hearings held in Dhaka on May 20 and 21 strongly opposed the proposal to increase electricity prices. They alleged that the burden of long-standing corruption, mismanagement, poor planning, and wastage in the power sector is now being shifted onto the shoulders of ordinary people.

Ruhin Hossain Prince, former general secretary of the Communist Party of Bangladesh, believes that the industrial and export sectors are already under various pressures. If electricity and fuel prices are increased further, production costs will rise even more, which would harm Bangladesh's competitiveness in international markets.

Earlier, on April 19, the price of a 12-kg LPG cylinder was raised by Tk 212 to Tk 1,940. In the same month, the price of a 12-kg cylinder was increased twice, for a total rise of Tk 599. However, consumers are having to buy LPG at even higher prices in the open market. Additionally, on April 18, the government raised the prices of all types of fuel oil.

At that time: Octane was increased by Tk 20 per liter to Tk 140, Petrol was increased by Tk 19 per liter to Tk 135, Diesel was increased by Tk 15 per liter to Tk 115, Kerosene was increased by Tk 18 per liter to Tk 130.

Although prices remained unchanged in May, fuel oil prices (excluding diesel) have been increased by Tk 5 per liter this month (June).

With the rising cost of essential commodities, a fresh hike in electricity prices would further increase public suffering. Atiqur Rahman, a resident of Mirpur-1 in the capital, said: "Our salaries are not increasing in line with the rising prices of everything. If this continues, how will we run our households?"

He added, "We understand that the government may be forced to raise prices. But no action is being taken against those whose irregularities and corruption are causing these increased expenses. Why should all the burden fall on ordinary people?"