Electricity Price Hike to Drive Inflation, Says Energy Expert

Due to the increase in electricity prices, inflation will occur, prices of goods will rise, and production costs will increase, said Dr. M. Tamim, VC of Independent University and an energy expert. Yesterday, he told Bangladesh Protidin, 'As a result of the price hike, everything related to electricity will become more expensive. In particular, the production and processing of electrical products will increase in price. This means that the production and processing of soap, plastic products, oil, sugar, pulses, etc., will be affected. And household expenses will increase. The electricity bill in every home will rise.' He further said, 'The reason for the increase in electricity prices for lifeline users this time is that the highest subsidy goes to the lifeline category. The rate that lifeline customers pay is much lower than the production cost. The lion's share of electricity subsidy goes to the lifeline. So, without increasing the electricity bill for lifeline customers, there is no way to reduce the subsidy.' Regarding the swift announcement of the electricity price hike after the public hearing, the energy expert said, 'Perhaps due to the budget, the price hike was announced quickly. Since the budget has come, we need to reduce the subsidy to balance the budget. A huge amount of Tk 1 lakh crore has been asked for in the budget for energy and electricity. If this huge amount is allocated, the country will not develop. However, most people are against the subsidy. The only argument in favor of subsidy is that it should be seen as an investment. No government calculates what benefit this subsidy brings.' This huge amount of subsidy given to the electricity sector mostly goes to households. Since 57% of grid electricity is used in households, the majority of the subsidy goes to the general public. This situation is somewhat like government assistance, which everyone receives. Low electricity prices mean lower monthly expenses. Due to the price increase, monthly expenses will now rise. The government assistance through subsidy will no longer be there, or will be reduced. However, the subsidy will not be completely eliminated. Dr. M. Tamim also said, 'The production cost of electricity is said to be Tk 12. There is much scope to reduce this production cost. There is a lack of efficiency in the system operation of electricity in the country. We are still producing 5,000 MW of oil-based electricity. 11% of total electricity is oil-based. Among the total produced electricity, 10-12% is used at Tk 27-28. This has a huge impact on electricity prices. We must move away from oil-based electricity. For that, we can reduce the use of oil-based electricity to zero during the day through renewable energy. This initiative should have been taken earlier. Replacing daytime oil-based electricity with renewable energy was important from the very beginning. It should have been done long ago but it wasn't. Now there is time and opportunity.' The energy expert said, 'The demand for solar electricity must be increased everywhere, from factories to all places. The government should reduce the taxes on solar panels and inverters to the minimum so that solar electricity can be installed widely across the country.'