Increase in electricity tariff

Going by newspaper reports, we understand that the ministry of energy has asked for subsidies in excess of Tk12.5 billion to beef up the Bangladesh Petroleum Corporation (BPC) operations. The cash infusion would go to pay for fuel imports that are needed to keeppower plants  (including rental) up and running. This comes in the backdrop of intimation by the Energy Division to the ministry of finance that US$5 billion will be required for the current fiscal to meet fuel costs. $1billion will have to be coughed up by the government as subsidy to BPC. Despite such heavy duty subsidisation, BPC continues to suffer losses as both diesel and kerosene are sold at a loss.
The continued use of diesel as fuel for running plants to generate electricity is beginning to exact a pressure on financial resources. Little wonder that the government has had to resort to foreign bank loans. During 2011-12 fiscal years, it had to borrow $2.6 billion from the Islamic Development Bank (IDB) to defray BPC costs. This year too, the government has had to resort to another $2.2 billion loan from IDB. The downside to all this heavy duty foreign borrowing is the objections raised by International Monetary Fund (IMF) which had set preconditions that were accepted by the government when it availed itself of $1billion ECF loan facility some years ago. As per IMF terms, the government must reduce funding for foreign fuel import to $775 million. Given that these are non-negotiable terms, consumers in all likelihood can expect another spiral in electricity bills coming their way soon.