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Power tariff raised by 5 paisa per unit

By Sharier Khan
The government has increased power tariff by 5 paisa per kilowatt hour from September 1 under a formula to adjust the tariff, every six months with the dollar rate fluctuation? official sources said.
The average rate of power tariff now stands at Tk 2.5 per kilowatt hour, which is slightly less than six US cents.
This is the second such increase this year. Since the Awami League came to power in June last year, power tariff was increased by about 17 per cent in two phases — 10 per cent in October and about 7 per cent in March this year. The second
hike was ’implemented' in April with retrospective effect without making any public announcement.
The government will continue to increase power tariff under the dollar rate and gas tariff adjustment formula' every six months until it decides a new tariff structure proposed by The Power Cell of the Energy Ministry.
Although power tariff in Bangladesh is already higher than that in the eastern part of India. Sri Lanka. Nepal and Bhutan (according to a World Bank study in 1996), the government has decided to increase the rate under constant pres-
sure from donors, specially the Asian Development Bank, the sources noted.
The Power Cell has proposed to the government to increase power tariff to nine US cents from six cents per kilowatt hour at present. The proposal has been temporarily shelved under "political considerations." The government had already increased prices of petroleum products and tariff rates of power and other utility services.
Donors are particularly insisting on increase of power tariff saying that otherwise private power companies would not be interested to sell power to the government at the current "poor" rate.
However. 20-year flat rates of power were offered by private power company AES in the case of 300 MW-450 MW Meghnaghat power project and the 300 MW Harlpur scheme. AES quoted Tk 1.16 (2.79 US cents) and Tk 1.14 (2.73 US cents) per kilowatt hour (kwh) respectively. Both these proposals were accepted and contracts were awarded to AES.
"These rates are much lower than that of the Bangladesh Power Development Board and show that the current tariff is already more thana attractive," said an energy expert.
Besides. 20-year flat rates of power offered by two private companies, which signed agreements with the government for installing two barge mounted power units, was 5.21 US cents, which also is lower than the current rate. Since barge mounted units use imported fuel as the main raw material, cost of power is usually higher than that in other units.
Initially, the Asian Development Bank had tagged the increase of power tariffby 25 per cent with its financing of the 9th power project. After a series of negotiations, the government agreed to increase tariff by 15 per cent. It had argued with the ADB that further increase would not be possible as it would mount sufferings of the people.
The government had accordingly Increased the tariff by 10 per cent in October, but did not increase it by 5 per cent in December. Instead, it increased the rate by 5 per cent in March and added another five paisa increase under the "dollar rate fluctuation formula" with that hike (together the percentage comes to around 7 per cent).