Bangladesh ups power tariff by 8.5% to cut losses

Bangladesh has increased electricity prices by an average of 8.5% effective starting this month, the power and energy ministry said on Thursday, in a bid to cut subsidies in line with the International Monetary Fund's conditions.

Bangladesh has increased electricity prices by an average of 8.5% effective starting this month, the power and energy ministry said on Thursday, in a bid to cut subsidies in line with the International Monetary Fund's conditions. The move comes after the government raised gas prices for power plants by 0.75 taka ($0.0068) per unit to ease the subsidy burden.

"The average price of electricity is 12 taka per unit, whereas the selling price is only 7 taka," State Minister for Power, Energy and Mineral Resources Nasrul Hamid told reporters, adding the government provides 430 billion taka ($3.93 billion) as subsidy annually. Bangladesh has struggled to pay for imported fuel and gas because of dwindling dollar reserves since the Russian invasion of Ukraine, forcing the country to turn last year to the IMF for a $4.7 billion bailout.

The South Asian country, however, faced its worst electricity crisis last year since 2013, a Reuters analysis of government data shows. Complying with an IMF condition for the loan, the government is introducing a dynamic fuel pricing formula for petroleum from March 1 in which prices will increase and decrease in line with international market, Hamid said.

($1 = 109.50 taka)