Electricity Price Hike: Anticipated But Untimely

Electricity prices rise to save subsidy, No need for it as other options are ready.

Bangladesh Energy Regulatory Commission(BERC) in a press conference has hiked electricity prices 16.68% at the retail level and 19.85% at the wholesale level. Earlier govt raised Petrol and Octane prices by Tk 5 per liter. This was the second upward fuel price adjustment in less than six weeks. Successive fuel price hikes and the recent electricity price increase will have cumulative effect on inflation, which govt has failed to contain.

Recently govt is mulling to drop a clause that ensures old owners' control over troubled banks from Bank Resolution Act 2026. This all signals that govt is desperate to ink some sort of deal with multinational donor institutions to finance the next budget.

Not all utility prices have witnessed upward rise. Prices of LPG have been lowered by Tk 55 per cylinder. But the increase in electricity price and fuel price garners lots of attention. BERC in its own assessment found that Tk 1.25 per unit rise would lead to Tk 130 billion subsidy cut for the power sector in FY 2026-27(see "BERC To Raise Electricity Price Tk 1.25 per Unit",The Business Standard, May 21,2026, https://www.tbsnews.net/bangla/Economy/news-details-493406). If the subsidy cut is the main reason for the recent hike, then bigger subsidy cuts may be achieved by exploring other means. Industry insiders shed some light into it. Platform of steel manufacturers recently held a press conference and urged the government not to raise electricity price. The move is likely to dent in their competitiveness. They solicited to slash the subsidy spent for capacity charge instead. It is indeed good to see that BERC chairman paid heed the advice and forwarded the suggestion to the government.

It is indeed true that higher fuel and electricity price will lead to higher input prices and cottage, micro, small and medium enterprises will bear the most brunt of it. It is indeed unjust that to contain the system loss or distribution loss,which will be 7.37% of total distribution in FY 2026-27, govt passes the burden to honest retail customers.

But I do support electricity price hike for electric vehicles and E-rickshaw charging stations. The electric three-wheeler annually costs the govt Tk 40 billion of missing electricity bill (see "E-rickshaw: Bane or Boon?", published here,December 09,2025,https://hoquestake.blogspot.com/2025/12/e-rickshaw-bane-or-boon.html?m=1). I think it is a good idea to recuperate some of those lost electricity bill through higher prices and imposition of tax. The latter will be helpful to keep a close tab on regulating their numbers on the road.

Striking the balance between industry competitiveness and subsidy cut should be at the core of govt policy. Exploring options like reducing the capacity charge sounds more viable when it comes to attain the goal of subsidy cut. It is also in line with the inflation control measure the central bank is pursuing. It is anticipated that the new govt will raise the utility prices given the macroeconomic situation. But when other options are available govt could refrain from doing it to make our lives a little easier.