If gas price rises, electricity will get costlier: PDB chairman

Electricity will get more expensive if the prices of gas increase following the recommendations of the technical evaluation team of Bangladesh Energy Regulatory Commission (BERC).

Mahbubur Rahman, chairman of Bangladesh Power Development Board (PDB), made the remarks while talking to the Business Insider Bangladesh over the issue on Thursday.

An effort to increase the price of electricity is started when the price of the primary fuel to generate power is increased by 10 percent, said the PDB chairman.

During the four-day public hearing which began from March 21, the evaluation committee of the BERC came up with a recommendation to increase the gas price by 20 percent for generating electricity.

“Natural gas is one of the key fuels for generating electricity. The production cost of electricity will go up if the gas price is hiked. As a result, the price of electricity will have to be increased,” he said.

The PDB buys per cubic metre of gas at Tk 4.45 at present while the technical committee recommended increasing the price to Tk 5.34.

The government will have to provide a huge amount of subsidy if it does not make upward adjustment in electricity price, said an official of the PDB.

A total of 55 percent electricity is generated from gas and 57 power plants out of a total 133 are fully dependent on methane gas and of which the government owns 30 while 27 are operated privately. And, among the government’s 30, the PDB operates 18 plants.

It may need Tk 70,000 crore in subsidy for the current fiscal year in the electricity and fertilizer sector, according to a source in the financial division of the finance ministry. Of this amount, Tk 35,000 will be needed in the electricity sector and Tk 25,000 in fertilizer sector, respectively, said the source.

Apart from that, Tk 10,000 will be needed as a subsidy for LNG, according to the source.

Meanwhile, in the incumbent national budget, Tk 8,000 crore for electricity and Tk 9,100 crore for fertilizer and Tk 8,000 for LNG has been allocated.

Earlier on February 27, 2020, the electricity price was increased to Tk 5.17 from Tk 4.77 per unit at wholesale and retail levels.

At that time, the price per unit of electricity increased to Tk 7.13 from Tk 6.77 at the consumers’ end.