The Bangladesh Energy Regulatory Commission (BERC) wants to reduce wholesale electricity prices after receiving pleas from power distribution agencies, but it will have no impact on retail prices.
If wholesale prices are reduced, there will be no change in consumer prices. This will only reduce PDB’s revenue, while distribution companies will see some savings, BERC sources said.
Following the restoration of previous electricity prices for lifeline (up to 50 units) and 75-unit residential consumers, distribution companies including REB (Rural Electrification Board) have faced deficits. According to BERC sources, this decision is being made to adjust those shortfalls.
Most recently, on June 3, an order was issued to increase electricity prices at both wholesale and retail (consumer) levels. Just one day after that announcement, the previous prices for lifeline consumers (up to 50 units) at Tk 4.63 and for 75-unit consumers at Tk 5.26 were reinstated. In these two categories, REB has 1 crore 61 lakh 47 thousand and 77 lakh 67 thousand consumers, respectively.
BERC calculations show that while reinstating the previous prices for up to 75 units brought relief to nearly 3 crore consumers, distribution companies have faced losses. Withdrawing the increased bills from these two residential tiers will reduce revenue collection by Tk 2,300 crore. Of this, REB, which is known to be the most ailing, will lose nearly Tk 1,500 crore in revenue.
For this reason, REB has applied to BERC to reduce wholesale prices. In its application, REB stated that although wholesale prices were increased, the retail price hike was later withdrawn. Keeping the previous rates for up to 75 units will result in an annual loss of Tk 1,780 crore.
Most of REB's cooperatives were already running at a loss. In the 2024-25 fiscal year, the net loss was Tk 1,731 crore. In that year, 13 cooperatives made a profit of Tk 3,637 crore 7 lakh. During the same period, 64 cooperatives incurred a net loss of Tk 5,374 crore 78 lakh. Tk 3,507 crore from profit-making cooperatives was cross-subsidised to loss-making cooperatives.
According to REB reports, in the past decade, the only net profit was Tk 67 crore 62 lakh in the 2018-19 fiscal year. The following year, a loss of Tk 33 crore 19 lakh was recorded. In the 2020-21 fiscal year, a profit of Tk 50 crore 11 lakh was made again. Since then, the cooperatives have incurred losses every year. The highest loss was in the 2023-24 fiscal year, when the loss stood at Tk 2,823 crore 69 lakh.
BERC Chairman Jalal Ahmed said that REB's application has been received. He said that before reinstating the previous rates for lifeline and up to 75 units on July 4, a virtual meeting was held with the distribution companies. The issue of reviewing wholesale rates was discussed there. Subsequently, REB submitted the application. The matter is currently under review.
In response to a question, he said no other distribution company has applied. However, if an order is issued, all distribution companies will be taken into consideration. Reducing wholesale prices will increase the losses of the Power Development Board (PDB).
Even after a 19.85 percent increase in wholesale power prices this month, an annual subsidy of nearly Tk 41,000 crore will still be required. If wholesale prices are reduced somewhat, the subsidy will have to be increased further.
