PDB seeks energy regulator’s guidance to trim losses

FT ONLINE

The Power Development Board has estimated a loss of Tk 86 billion next year and taken the issue to the Bangladesh Energy Regulatory Commission seeking its guidance.

Though it is deemed by many as a way to increase power prices, PDB Chairman Khaled Mahmud said his agency just brought the issue to BERC’s attention last week and left it to the regulator to decide on it.

"This is not a proposal to increase electricity prices. We have informed BERC and they'll now review it," Mahmud said.

"The price we charge for electricity is not its real value. A gas price hike has increased the cost of power production. We've just informed them of our estimated loss to be incurred in 2020."

PDB will have to bear a production cost of Tk 452 billion in 2020 and will earn Tk 366 billion selling electricity, a PDB official said.

"Now PDB looks to BERC on how it manages the loss -- by increasing electricity prices or through subsidy.”

“The commission will review the proposal and then decide whether to go for a hearing or dismiss it," said BERC member Mizanur Rahman.

The regulator last hiked electricity prices by 5.3 percent at the consumer level on November 23, 2017. Power prices have increased eight times since the Awami League formed the government a decade ago.

PDB faced a loss of Tk 92.84 billion in 2017-18 even after the price was increased. The amount was Tk 80 billion in 2018-19.

The energy regulator increased gas prices by 32.8 percent for customers at all levels in July.

"Earlier we used to get subsidy for oil prices. We've informed BERC that our production cost has increased because of a 41 percent hike in gas prices," said Mahmud.

According to PDB’s latest annual report, the oil-run power plants account for 25 percent of the total power demand. PDB sells electricity at discounted rates, which means the government meets the deficit with a subsidy.