The Bhutanese Leading the way.
If the Bhutan Power Corporation’s proposed electricity tariff hike is accepted by the Bhutan Electricity Authority (BEA) and the cabinet, then you and your family could well be paying three to four times more in electricity bills.
As per BPC’s latest domestic tariff increase proposal, the low voltage users or household users using under 100 units of electricity will have to pay a flat Nu 100 regardless of the energy usage as compared to current Nu 0.85 per unit. Anyone using above 100 units will have to pay a whopping Nu 5.08 per unit compared to the current price of Nu 1.62 per unit for 101 to 300 units and Nu 2.14 per unit above 300 units.
In short, this will mean that currently on an average, the urban households in winter that use refrigerator, boiler, rice cooker, geyser, heater, TV, etc., consumes around 1022 units of electricity which results in an electric bill of around Nu 1,900 per month or less.
If BPC’s rates were made effective then this bill would increase to Nu 4,787. This is, according to a presentation made to the BEA arguing against such a hike, by some private citizens and businessmen.
The presentation shows that power users in the rural areas who generally use electricity judiciously use below 100 units will also suffer.
The presentation shows that on an average, a rural household uses only around 72 units a month paying around Nu 62 per month. The BPC’s proposal to keep a flat Nu 100 per month for such users despite the usage is expected to hit rural purses.
According to businessmen behind the presentation, while low voltage users who comprise the bulk of Bhutanese users have to pay higher bills, the tariff raise would effectively make most medium and heavy voltage industries shut shop.
For medium voltage users, the average tariff increase incorporating both the energy charge and demand charge is from the current Nu 2.16 to Nu 3.94. For high voltage industries who contribute the bulk of corporate industrial tax, the average increase incorporating both the energy charge and demand charge would be from the existing Nu 1.74 to Nu 2.4c primarily on account of the huge hike in demand charges.
A BPC official said that the latest rates presented by the corporation was after incorporating both DGPC’s hike from Nu 1.2 to Nu 1.99 per unit and BPC’s own hike.
A businessman questioned the rationale and need of both BPC and DGPC for the hike, when they are still making record profits.
He said, “BPC’s profit after tax in 2011 was Nu 897.9 mn and in 2012 it was Nu 904.25 mn, while in the case of DGPC it was Nu 3.933 bn in 2011 and Nu 4.181 bn in 2012, which shows that both corporations continue to make huge record profits even at the current tariff rates.”
He said even compared to major companies and industries in Bhutan, DGPC and BPC were the most profitable.
He said on the other hand the salaries and bonuses of both BPC and DGPC kept going up.
DGPC in its stand had argued for a higher domestic tariff rate as it said that it was losing revenue on the account of increasing domestic demand which was priced lower then export tariff. It also said that it needed adequate return on equity among other issues like operation and maintenance.
The BPC had mainly cited the growing costs of establishing new lines and maintain the ones than had been established. It also cited the need to meet various loan commitments it had taken to carry out the rural electrification project of the previous government. It cited the high costs of actually transporting power compared to what it actually charged customers.
The businessman pointed out that historically domestic tariff rates were quite low but it started increasing significantly with the establishment of the DGPC and BPC whose profits also saw an increase.
He pointed to Bhutan Vision 2020 document which says, “The cheap hydropower we are able to produce gives us a distinct comparative advantage in the development of natural resource based industries.”
