A proposal has been submitted to raise electricity prices

The government has moved forward with a fresh initiative to increase electricity tariffs, submitting a proposal on Monday to the Bangladesh Energy Regulatory Commission (BERC) to revise rates at both wholesale and retail levels.

Under the proposal, wholesale electricity prices could rise by about Tk1.20 to Tk1.50 per unit, while retail tariffs may increase by as much as Tk1.38 per unit. The plan introduces a tiered pricing structure based on consumption, with low-usage lifeline consumers likely to be exempt from any hike.

As per the usual process, power distribution companies are required to submit their own tariff proposals to BERC. The Bangladesh Power Development Board (BPDB) and other distribution entities are currently preparing their submissions following directives from the Power Division, with filings expected within the week.

BERC Chairman Jalal Ahmed said the commission will examine the proposals in line with legal provisions once received, while BPDB Chairman Rezaul Karim confirmed that work is ongoing to finalise the proposal. Public hearings will be held before any final decision, and new tariffs could take effect from early June if approved.

The Power Division said the proposed adjustment is aimed at addressing rising fuel import costs, the widening gap between generation costs and consumer prices, and the growing subsidy burden. A high-level committee led by the finance minister had earlier reviewed the sector’s financial strain and recommended a price revision.

According to the proposal, consumers using more than 400 units per month may face an increase of up to Tk1.38 per unit, while those consuming between 76 and 400 units could see a rise of around 70 paisa. Lifeline users—those consuming up to 70 units—are expected to remain unaffected.

Bangladesh currently has around 49.7 million electricity consumers, with roughly 37 percent likely to be directly impacted by the hike. The remaining 63 percent, mostly low-usage users, are expected to face limited direct effects. However, analysts caution that higher electricity costs for industries and businesses could eventually drive up prices of goods and services.

At present, the average cost of electricity generation exceeds the retail price by about Tk5.50 per unit, increasing reliance on subsidies. In the ongoing 2025–26 fiscal year, BPDB’s projected deficit could reach Tk56,475 crore, with an additional Tk15,000 crore subsidy needed due to elevated global fuel prices. The government has already allocated Tk36,000 crore for the sector.

A large share of power generation depends on imported fuels such as LNG, coal, and oil, making costs highly sensitive to global price fluctuations. Additionally, capacity payments to power plants—even when they are not fully operational—continue to add financial pressure.

Major projects, including Meghnaghat, the coal-based RPCPL-Norinco plant, and the Rupsha 800 MW power plant, have also contributed to rising costs.

The last tariff adjustment was made in February 2024, when retail electricity prices increased by an average of 8.5 percent to Tk8.95 per unit, while wholesale tariffs rose by 5.07 percent to Tk7.04 per unit.