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The government has increased the retail price of electricity in the country after approximately 27 months. The average price of electricity per unit (kilowatt-hour) at the consumer level has been set at BDT 10.63, up from BDT 9.11. This new tariff came into effect on June 1st. Depending on the consumer category, electricity prices have increased by 10 to nearly 20 percent.
On Wednesday, the Bangladesh Energy Regulatory Commission (BERC) announced the new tariff at a press conference. Concurrently, wholesale electricity prices and transmission charges have also been increased.
According to the new decision, electricity prices for residential consumers have increased by an average of 16.68 percent. For ‘lifeline’ customers, the price hike is 15 percent, while in various other categories, prices have been raised by up to almost 20 percent. Consequently, stakeholders believe this will create new pressure on the monthly expenses of low and middle-income families.
Currently, there are approximately 50 million electricity consumers in the country, with over 40 million being residential customers. Among them, about 17.9 million customers are under the ‘lifeline’ facility. It is expected that the impact of this price increase will be most significant on these families with limited income and low electricity consumption.
Under the new rates, electricity costs have risen for almost all categories of consumers, including agricultural irrigation, small and cottage industries, commercial establishments, hospitals, educational institutions, religious institutions, electric vehicles, and battery charging. For agricultural irrigation, the price per unit has increased by BDT 0.79, and for hospitals and educational institutions, it has risen by up to approximately BDT 1.50.
Meanwhile, the average wholesale price of electricity per unit has been increased from BDT 7.04 to BDT 8.39. Additionally, the average transmission charge has been set at approximately BDT 0.39, up from BDT 0.31.
BERC Chairman Jalal Ahmed stated that increasing the wholesale price by BDT 1.39 per unit will generate an additional annual revenue of approximately BDT 14.2 billion. However, even with this increase, the government will still have to provide subsidies of approximately BDT 41 billion annually to the power sector.
According to analysts, this electricity price hike, amidst the high prices of various daily necessities including fuel oil and edible oil, will further increase the cost of living for the general populace. Concurrently, rising agricultural and industrial production costs could also create new pressure on overall inflation.