Business, living cost rise feared as BERC proposes Tk1.25 power tariff hike

Infographic: TBS

The Technical Evaluation Committee of the Bangladesh Energy Regulatory Commission (BERC) has recommended a weighted average increase of Tk1.25 per kilowatt-hour (kWh) in retail electricity tariffs, triggering fresh concern among businesses, economists and consumer groups over rising living costs and industrial competitiveness.

Officials said the final decision will be made at an upcoming expert committee meeting, based on recommendations from the distribution utilities and the technical committee, with an announcement likely in June and possible implementation from July.

At a public hearing held on Wednesday, the Bangladesh Power Development Board (PDB) separately proposed raising wholesale electricity tariffs by Tk1.20 to Tk1.50 per unit, warning that without adjustment, the sector's financial deficit would widen significantly.

During another hearing held today (21 May), the Technical Evaluation Committee said the proposed tariff adjustment could reduce government power subsidies by up to Tk13,000 crore in the fiscal 2026-27.

The committee estimated that the combined net distribution revenue requirement of all power utilities would stand at Tk1,19,285 crore against projected electricity sales of 95,612 million kilowatt-hours in the same fiscal year.

It also projected a marginal improvement in system efficiency, with overall distribution losses expected to fall slightly to 7.37% in FY27 from 7.38% in FY25.

The committee recommended maintaining the existing slab structure, except for the lifeline category covering consumers using up to 50 units of electricity. A proposal to merge the lower consumption slabs into a broader category was rejected on the grounds that it could increase the burden on marginal consumers.

Rising deficit and wholesale tariff pressure

The PDB said total generation costs are projected to reach Tk1,43,108 crore in 2026-27, with average generation costs rising to around Tk12.91 per unit. At current tariff levels, revenue is expected to remain significantly lower, leaving a large deficit.

The utility said a Tk1.20 increase could reduce monthly losses by Tk1,329 crore, while a Tk1.50 rise could narrow the shortfall by Tk1,666 crore. It also said subsidy requirements could fall by around one-fifth to one-fourth if the adjustment is approved.

The finance ministry had previously recommended tariff increases in the range of Tk1.29 to Tk1.61 per unit, while stakeholders have repeatedly warned that higher prices would further strain households and industries.

Several distribution utilities also sought retail tariff increases, citing mounting financial losses. Desco proposed a 9.67% increase, while DPDC sought a 6.96% rise.

BERC Chairman Jalal Ahmed said the commission would consider all opinions presented at the hearing before making a final decision on electricity tariff adjustments.

Strong opposition from stakeholders

The retail and wholesale tariff proposals have drawn swift and severe condemnation from consumer rights groups, business leaders, and political parties. Speaking to TBS, they argue that the hike will severely impact households already affected by high inflation.

Fahmida Khatun, executive director of the Centre for Policy Dialogue, warned that the tariff hike would inevitably increase the cost of living for families and trigger a negative chain effect across industries, forcing consumers to pay more for basic goods. 

She noted that while the government feels compelled to act due to dwindling fiscal space, the state is repeatedly passing the burden onto citizens instead of eliminating deep-rooted corruption, systemic waste, and operational inefficiencies within the power sector.

Expressing deep concern over industrial survival, Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, said the hike contradicts government promises to reduce the cost of doing business. 

He pointed out that factories are already suffering from poor power quality and frequent voltage fluctuations that damage expensive machinery, adding that pushing tariffs higher without ensuring uninterrupted supply could force struggling, low-margin factories to shut down entirely.

Echoing these concerns, AHM Shofiquzzaman, president of the Consumers Association of Bangladesh, said the price hike would inject additional costs into agriculture, transport, and small businesses, making life increasingly difficult for lower and middle-income groups whose incomes have not kept pace with inflation.

During the regulatory hearings, industry representatives and various political leaders dismissed the consultation process as a mere formality, asserting that the authorities are prioritising state accounting balances over the raw survival of ordinary citizens and local industrial competitiveness.