A 19 or 20% increase in the wholesale electricity price is a significant increase. We need to know the reasons for this increase, and also why our energy authorities are increasing electricity prices – bulk and retail – randomly. We observed a serious lack of accountability throughout the electricity pricing process.
While our power generation capacity is 25,000 megawatts, so far we have never been able to produce more than 15,000 megawatts. And although we weren’t able to use the remaining 10,000 megawatts, we paid a hefty amount of money as a capacity charge to private companies. If this is the reason for this increase in the price of electricity – and I suppose it could be one of the reasons – then the question is: where is the responsibility of the authorities concerned? We need to know if the Bangladesh Energy Regulatory Commission (BERC) increased the price just because of the capacity payment.
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In one of my studies, I found that there is a serious lack of accountability among distribution and transmission companies. They know very well that they can ask the BERC to increase the price to the consumer if their expenses increase due to the increase in the price of electricity wholesale. These companies must be accountable. We need to know exactly where the cost of production and transmission has gone up.
Moreover, the result of this price increase will not be good for the government either. The Prime Minister recently inaugurated 50 industrial units, projects and facilities in Economic Zones (EZ). But investors will not be interested in investing there if the price of electricity increases randomly.
The whole world is now trying to reduce energy prices. Currently, the price of gasoline is the same as before the war in Ukraine. US Brent oil was sold below USD 80 yesterday. Overall, the price of oil is falling. So raising the price of wholesale electricity right now doesn’t seem like a rational decision. Our energy authorities must be held accountable for making such a decision. Such rash decisions will not only create pressure on consumers, but will also ruin our industrial competitiveness and have a negative impact on our foreign investments and the economy in general.
AK Enamul Haque is a professor in the Department of Economics at East West University.
(As said to Naznin Tithi of The star of the day)