Power subscribers at different levels may face a double trouble next month as the power distributors and finance ministry proposed mobilizing over BDT70 billion through raising power tariff and VAT hike, officials said. “We have already proposed raising retail and wholesale power tariff considering subsidy for the power sector,” said Bangladesh Power Development Board (BPDB) chairman Khaled Mahmood. Another official said the BPDB projected an additional BDT3,500 billion in revenue by raising bulk level power tariff so that it can minimize loss. Besides, another BDT35 billin is likely to be earned by the National Board of Revenue (NBR) through the VAT hike. The proposed VAT will be 15 percent from the existing 5 percent. The BPDB has already projected such an additional revenue earning by evaluating the proposed VAT law, said the official. According to the BPDB, consumers would have to pay an extra BDT0.67 per unit, subject to the new VAT law from July, 2017. The power tariff is now BDT6.92 per unit considering 5 percent VAT and the billing rate is BDT6.73 per unit. The BPDB sent a proposal to Bangladesh Energy Regulatory Commission (BERC) asking it to increase the retail price of electricity by BDT1.05 per unit (kilowatt-hour). “We have proposed increasing the retail power tariff to BDT7.78 from BDT6.73,” an official said. The official further said the BPDB has been incurring huge losses by purchasing electricity from costly rental and quick rental power plants. “We are seeking budgetary support in this regard. The power sector will get a subsidy of BDT55 billion, which is the same as allocated in the current FY,” the official confirmed.
The BPDB will require 29 percent bulk tariff hike to reach a break-even point, said the BPDB official, adding, “We have proposed a 14.5 percent bulk tariff to mobilize BDT35 billion for compensation on costly power purchase.” Besides, another BDT3-3.50 billion may be mobilized for increasing 12.5 percent retail tariff hike, he added. The Rural Electrification Board of Bangladesh sought a 7.08 percent rise while West-Zone Power Distribution Company Ltd asked for 10.76 percent rise, Dhaka Power Distribution Company Ltd for 8.86 percent rise, and Dhaka Electric Supply Company Ltd (DESCO) asked for 8.35 percent hike in retail tariff.