Privatising power distributors may raise consumer costs

Published : Sunday, 23 August, 2026 at 3:42 PM

Observer Online Report

Privatising electricity distribution companies could increase consumers’ power costs by around 20 per cent, said Consumers Association of Bangladesh (CAB) Energy Adviser Prof Shamsul Alam.

He made the remarks at a public hearing on the proposed tariff for electricity generated by renewable energy-based merchant power plants (MPPs) at the International Mother Language Institute auditorium in Segunbagicha, Dhaka, on Sunday. The Bangladesh Energy Regulatory Commission (BERC) organised the hearing.

Shamsul Alam said attempts were being made to privatise distribution companies on the grounds that they were incurring losses, although the companies were currently financially viable and operating profitably.

“During a crisis, the government stands by ordinary people. But private businesses primarily seek to maximise profits. If distribution companies are privatised, power costs are likely to rise, ultimately putting greater pressure on consumers,” he said.

He claimed that one distribution company had a revenue surplus of around Tk 1,500 crore after receiving Tk 1.43 in revenue for every Tk 1 spent. He said distribution companies continued to receive their prescribed charges and returns regardless of the price at which electricity was purchased or sold by the government.

The CAB adviser also questioned the proposed transmission charge for MPPs. He said the existing transmission charge was 38 paise per unit, but an additional charge of around Tk 1.50 had been proposed for MPPs without a clear explanation.

He also criticised a proposal to provide the Bangladesh Power Development Board (BPDB) with an additional five paise per unit for meter reading and billing adjustments for MPPs. He said such charges should be based on actual costs, fairness and rationality rather than assumptions.

Questioning the proposed tariff for renewable electricity, Shamsul Alam said the BERC had the legal authority to determine such tariffs under Section 6(17) of the relevant law. However, he claimed that the Power Division often determined prices in practice.

Referring to a proposed solar power tariff of Tk 6.48 per unit recommended by BERC’s technical committee, he said it was too high. He claimed that even after adjusting for the dollar exchange rate, solar power tariffs in India and Pakistan were around Tk 3.80 and Tk 3.90 per unit respectively.

He also questioned the parameters and calculations used to determine the tariff, particularly the radiation data, and urged BERC to demonstrate how the proposed Tk 6.48 tariff was justified.

Shamsul Alam further criticised the pricing model for existing independent power producers (IPPs), describing it as “exploitative”. He said there were significant gaps in the way capacity payments and electricity prices were determined for coal-fired and other private power plants.

He also proposed introducing a smart monitoring system for overseeing electricity supply and operations. Such a system could be developed within three to six months with BERC funding, he said, adding that it would reduce the BPDB’s workload and improve transparency and accountability through automation.

Expressing concern over unused capacity in the power sector, he said consumers were ultimately bearing the costs and losses associated with such idle capacity.

He also urged the BERC chairman to ensure an effective one-stop service for licences and clearances so that local entrepreneurs would not have to pay bribes or additional money to obtain approvals.

Shamsul Alam called for greater transparency, data-based analysis, legal compliance and protection of consumer interests in electricity tariff-setting.

SKS