Autonomous BERC subordinates itself to energy ministry

The Bangladesh Energy Regulatory Commission has for five years been seeking the approval of the power and energy ministry before framing regulations involving energy prices and standards although it has the legal authority to act autonomously in this area.
Energy commission member Salim Mahmud told New Age that the practice of seeking approval of the ministry’s energy division relating to draft regulations went ‘against the spirit of the Bangladesh Energy Regulatory Commission Act 2003.’
Salim, however did not respond to a question about why the commission has sought the ministry’s approval.
After a request from the commission for a legal opinion on whether it ‘has the power to make regulations under Section 59 of the BERC Act 2003,’ in April 2013,  Amir and Amir Law Associates responded by stating, ‘Power to enact to enact any regulation has been delegated through the BERC Act 2003, giving the commission… the statutory authority to make regulations independently….’
The objective of the BERC Act 2003, as explained in the preamble to the act, is ‘… to create an atmosphere conducive to private investment in the generation of electricity, and transmission and marketing of gas resources and petroleum products, to ensure transparency in the management, operation and tariff in these sectors; to protect consumers’ interest and to promote the creation of a competitive market….’
Taking advantage from BERC’s practice of seeking the ministry’s agreement before framing a regulation, the ministry has for a year and a half shelved a draft regulation that would have enabled the commission to set prices of all petroleum products other than natural gas, BERC officials have alleged to New Age.
In early July 2012, the commission sent the draft regulation to the power and energy ministry for its ‘opinion’ before a law ministry vetting.
The government now sets prices of petroleum products using its executive power which has drawn widespread criticism when it increased the price of diesel and kerosene by Tk 24 a litre and that of petrol and octane by Tk 22 in five phases between May 2011 and January 2013.
In 2011, It also unilaterally increased the price of furnace oil by Tk 36 a litre, from Tk 24 to Tk 60 a litre.
The price increases were results of pressure on the government from the International Monetary Fund which sought to reduce the level of government subsidies on energy.
Consumers, however, face the financial hardship because of fuel price increases which have pushed up goods prices and the cost of living.

Source: published on page 3 on New Age on Sunday, January 19, 2014

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5 YEARS OF JS, POWER SECTOR: More power burdens people with extra cost

The Awami League-led government has increased the level of power produced in the country over in the past five years but at the cost of much higher electricity prices for consumers.

Between 2009–10 and 2012–13, the government increased annual power generation by 34 per cent, from 2,725.32 crore kilowatt-hours, or units, to 3,648.22 crore units, according to the Power Development Board.
The cost of electricity is, however, now over 60 per cent more than it was before March 2010.
The increased cost is down to the government deciding to buy electricity from rental power plants that use expensive oil in their power production rather than making the existing gas plants in the power sector more efficient.
In the 2012–13 financial year, power consumers paid more than Tk 6,000 crore more for power than before 2010.
The increase in the power price has also increased the cost of living significantly with its cascading effects on market and house rent, experts said.
The government signed 20 contracts with 17 private entrepreneurs to
buy electricity from their plants with a combined generation capacity of 1,653MW for three to five years.
Except for four rental plants with a total 350MW capacity owned by the UK-based power supplier Aggreko International, the remaining 16 plants with 1,303MW capacity are owned by local entrepreneurs most of which have no experience in the area.
Out of the 16 short-term power projects, 13 were given to local entrepreneurs without a tender.
In August 2010, the government enacted the Speedy Supply of Power and Energy (Special Provision) Act 2010 which gave policy makers and officials immunity from prosecution under the public procurement rules.
In September 2012, the government has extended the ‘indemnity’ act for two more years.
In the past two months, the government has also extended the three-year contracts of seven rental power suppliers even though they had previously been penalised for their delay in starting supply of electricity, consumption of excess fuel or failure in supplying electricity in line with the requirement of the power board.
Policy makers, including the finance minister, Abul Maal Abdul Muhith, and the prime minister’s immediate-past energy adviser Tawfiq-E-Elahi Chowdhury said that the government’s policy in purchasing power from the private entrepreneurs had successfully contributed to the establishment of local entrepreneurs in the area.
The government started power purchase from rental suppliers from late 2010 to increase the power generation in a short time which doubled the average power generation cost — from Tk 2.59 a unit to Tk 5.57 a unit.
The government pressed the Bangladesh Energy Regulatory Commission to double the price of bulk electricity from Tk 2.37 a unit to Tk 4.7 a unit between March 2010 and September 2012.
The Bangladesh Energy Regulatory Commission also increased the average retail price of electricity by 60 per cent from Tk 3.6 a unit to Tk 6 a unit in the period.
In addition, the government subsidy in power generation increased to over Tk 5,500 crore in the 2012–13 financial year from Tk 900 crore in 2008–09 while the subsidy in distribution increased to about Tk 800 crore from less than Tk 400 crore in the period, according to the BERC.

Source: Front Page of New Age, Friday, January 10, 2014


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