PMO sits to discuss power tariff today

Prime Minister Office (PMO) will sit today (Tuesday) to discuss power tariff issues since the Finance Minister has directed authorities concerned to implement a flat VAT on retail electricity prices.
The meeting is also set to discuss on fuel mix issues, as Petrobangla has decided to supply 500 mmcf gas (in LNG form). Bangladesh Power Development Board (BPDB) inked 1700 MW plus liquid fuel based power projects recently.  The initiative is likely to increase the price of electricity shortly, according to the sources.
State-run BPDB has submitted a proposal to the Bangladesh Energy Regulatory Commission (BERC) On March 9 this year. The proposal urged the regulator to hike retail prices by Tk 0.98 per unit, saying it was necessary to increase retail tariffs to Tk 7.71 from Tk 6.73 and wholesale tariffs to Tk 5.59 from Tk 4.87, sources said.
The meeting is crucial as the Power Board spends Tk 5.59 for generating one unit of electricity. The board also purchases electricity from other public and private utility providers while it sells the power to the power distribution utilities at Tk 4.87 per unit. Moreover, the meeting is expected to introduce more liquid fuel -run power plants and LNG to feed the country's growing electricity demand.
"The implementation of a flat rate VAT on retail electricity price appears to be a complex task as it needed a number of changes while complying with several organisations concerned," a senior official of BERC said.
"Currently, consumers are paying 5 per cent VAT on electricity price. At the same time the BPDB is also paying the same VAT on their fuel purchase bill. Against this backdrop, Finance Ministry asked BPDB to make this VAT inclusive into the consumers' bill", so we need to sit to discuss the issue, he added.
Since re-fixing the price structure and getting rebate has become a bit complex, officials of the NBR, PDB and REB held several meetings with the BERC in the past two weeks to finalise the VAT rate on retail prices.
A senior BERC official told that electricity distribution companies needed to change their billing forms, which currently includes a 5 per cent VAT rate. As per the new law, there will be no separate figures showing VAT percentages in the billing papers as the VAT will be included in the bills.
The energy regulator found itself in a fix after both the National Board of Revenue (NBR) and the Power Division were in a state of confusion regarding how to adjust the VAT with the electricity price.
The easy yet unpopular solution was to increase the retail electricity price as per the proposal of electricity production, transmission and distribution companies.
This is because power generating companies under the existing VAT law of 1991 do not get any rebate on VAT paid at the rate of 15 per cent on the purchase of raw materials including gas, oil and coal.
The power development board is preparing a proposal for raising the retail prices of electricity as a reflection of the proposed bulk price hike, a board official said.
The energy commission raised the price of bulk electricity by 3.62 per cent, up from Tk 4.70 per unit to Tk 4.87 per unit, at the same time, the commission increased the retail prices of electricity by 3.62 per cent, up from Tk 6.10 per unit to Tk 6.33 per unit last time.