THE government mulling over an increase in power price four times a year for the next three years to reduce subsidy is unacceptable and an injustice to consumers. Power Division officials are reported to have proposed the increase to a visiting International Monetary Fund mission that has asked the government to increase power tariffs to reduce subsidy. The Power Development Board in 2024 decided to increase retail power prices by 78 per cent. Without even bothering to address the myriad of issues that have plagued the power sector, the decision to increase power prices to reduce subsidy is an injustice to consumers. The government has already tripled power prices since 2009, and that too, without ensuring uninterrupted power supply. What beats the logic is that when government and independent studies have repeatedly pointed out that the power policy is so flawed and peculiarly designed to channel public money to private pockets and to go ahead with a lopsided development, the authorities have not heeded them and, in an irrational gesture, took punitive action against government officials and the committee that pointed out power policy absurdity.
The power sector is burdened with an abnormal level of overcapacity, an absurd capacity payment system and lopsided development. The power overcapacity is almost 60 per cent, which suggests that more than a half of the installed power capacity is not used. Such an overcapacity bleeds the economy as the power plants are entitled to a capacity charge that the government must pay irrespective of electricity being produced. Even the International Monetary |Fund has questioned the rationality of the capacity payment. Since 2009, the government has paid Tk 1,04,000 crore to independent and rental power producers in capacity charge, as the minister of state for power said in the parliament in September 2023. Another major flaw in the power policy is an over-reliance on imported gas and coal for power production. The government has continued to ignore the calls for gas exploration although it could make power production less costly. What is also problematic is that when the government publicises that it has given regular subsidy to the loss-incurring Power Board, it has, in reality, given very little subsidy that could help consumers. The government has, rather, continued to publicise a large amount of loans given to the Power Board in subsidy. In the 2023 financial year, the government spent Tk 28,000 crore on capacity payment while it had to allocate Tk 17,000 crores for subsidy.
In a time of record inflation, when the government should have taken consumer-friendly measures, the government appears to be pushing consumers into a vulnerable and unsupported position. The authorities must, therefore, not burden consumers with consequences of its wrong policies and inefficiencies. The government must revisit its power policy, make a course correction and set the policy right to reduce subsidy.
