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Continuation of subsidy for poor people on energy price suggested

Speakers at a seminar on Saturday said the government must continue subsidy for the poor people even after fixing the energy price on the basis of the market value.

They said the energy price might raise three folds in the next 10 years obviously in a transparent way but it should be contained within the limit of the poor people by increasing efficiency in the energy sector.

The seminar on Energy Tariff and National Economy was organised by the Forum for Energy Reporters Bangladesh (FERB) at the Biduyt Bhaban in the city.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid addressed the seminar as the chief guest and energy expert Professor Dr M Tamim presented the keynote paper.

Nasrul Hamid said the government led by Prime Minister Sheikh Hasina would supply electricity to all citizens (100%) by 2018, adding, “But it will take more time to supply uninterrupted electricity with subsidy to continue to meet the energy demand.”

He said the government is importing liquefied natural gas (LNG) with initiatives already taken to rebate VAT and tax on LNG. “We have to bring changes in our plans keeping pace with the global situation as the LNG and oil prices are declining in the world market. As a result, we have to pay attention to that for alternative fuel aimed at ensuring energy security.”

“The cost for coal fired power plants will increase due to modern and latest technology and environmental impacts,” the state minister said.

The government would fix power tariff through consultation with all concerned, he said adding, the main objective of the government is to ensure energy security and provide electricity to every household on an affordable price.

Professor Dr M Tamim said the fuel mix is the principal driving force behind electricity pricing, as energy prices have been lower (sometime much lower) than market prices aided by government subsidy (direct and tacit).

“With the economy growing fast and getting bigger, the energy price must reflect market price. Predicting future pricing is challenging because, shifting fuel mix, uncertain demand forecast, changes in international energy price, government subsidy/loan policy, government policy/priority shift in energy decision,” he said.

Professor Tamim, also former special assistant to the chief advisor, said while fixing the prices of fuel at the market price, the poor people will have to continue the subsidy, adding, “The price predictability is extremely important for Industries, especially for electricity.”

He said the generation cost was Taka 6.27/kWh in 2014-15 whereas the cost went down to Taka 5.55/kWh in 15-16 against an average bulk sale of Taka 4.9 reducing subsidy substantially.

Tamim highlighted the chronology of World and Bangladesh gas price like in 1974 gas price was Taka 3.7 at consumer level, while it was only $ 0.46 (mcf) in power sector and the price rose to Taka 73.91 and $ 1.07 in 2007, adding, “Many factors will affect the price of fuel. The price of fuel will be fixed at the market price.”

He also suggested in his keynote that the LPG price should be kept in the market with the combination of gas pipeline, adding, “The government should not control the price of fuel in any situation.”

Bangladesh Energy Regulatory Commission Member Mizanur Rahman said, “If the price of primary fuel changes, electricity price will also be changed. But the fuel price will always be kept under purchasing capacity of the common people.”

Bangladesh Power Development Board Chairman Khaled Mahmud said that efforts have been taken to increase efficiency in power production, adding, “The old power plants are being phased out.”

Power Cell Director General Engineer Mohammad Hossain said that the government should have control over the energy sector’s price to ensure energy security for all.

Professor Shamsul Alam, advisor to the Consumers Association of Bangladesh said that transparency should be ensured in the energy policy and then all problems will be resolved.

Imran Karim, vice-president of the Bangladesh Independent Power Producers Association, a private power producer`s organisation, said that the bill has to be paid without using gas. That`s why the appropriate meters have to be provided in the industry and enhance fuel supply in the sector.

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