Tariff hike to hit ordinary consumers hard

As you may be aware, Bhutan Power Corporation has submitted a proposal to revise the domestic power tariff rates from July 2013 to July 2016. This is laudable in principle, as the Bhutan Power Corporation is seeking to both increase Government revenue and curtail the wastage of power. However, what is not appreciated and, in fact, rather alarming is the size of the proposed increase in the tariff rates. The proposal is worrying, to say the least.
The proposed rates, if accepted by the Bhutan Electricity Authority, will have a huge financial impact not only onpower intensive industries, but also on the average Bhutanese citizen. It will effectively deal a crippling blow tothe private sector – which, we are told, is the country’s engine of growth.
With the proposed tariff structure, the average Bhutanese home will have to spend double the amount on their electricity usage. With the monthly electricity bill already comprising a significant portion of an average family’s finances, this revision will raise the cost of living in Bhutan and make electricity a luxury commodity for the average Bhutanese.
It is ironic that we, a nation with surpluselectricity,would prefer to export electricity at cheap rates while pricingit beyond the reach of a vast majority of its own citizens.
The table below shows the impact of the proposed tariff structureacross various customer categories –
1: Nu/kVA/month
BPC’s financial performance over the last five years has been nothing short of outstanding, having declared an average profit after tax of Nu. 837.8 billion over the last five years. Being a monopolylets you do that. BPC has an average profit margin of 26% over the past five years. In comparison, the average business entity operating in a competitive environment must make do witha proft margin of 10% to 15%.
The stand taken by the owner of BPC on this issue, the Druk Holding and Investments (DHI), has also beenextremely disappointing. One of the main reasons for DHI’s formation,as enshrined in its charter, is to lead, complement and spearhead the growth of a dynamic private sector. The way the tariff proposal has been formulated – if approved – will lead to the closure of a number of business houses rather than promoting the private sector. This comes at a time when the Bhutanese economy is already in dire straits with the Rupee shortage and credit crunch. A move like this will do nothing but aggravatethe situation further.
We hope that all the agencies involved in the tariff revision process see the bigger picture and use their common sense and arrive at a tariff that,while enhancing BPC’s revenue, also leaves some breathing space both for the ordinary citizens of the country and the private sector.

S. Dorji
Changangkha, Thimphu

GRAPH

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23 comments

  1. God pl. help poor Bhutanese …

    • This increase, if approved as proposed, will put many poor people and power driven industries under extreme pressure. We all must remember is that this is happening in a GNH country where everyone is not only preaching GNH but claimed to be exporting GNH.

  2. The meltdown of the economic crisis of the Europe or global economic recession did not affect the Bhutanese population in general and did not sense it. But it is slowly creeping in and it will definitely affect us making us poorer now.
    We general public want to know what is the basis for the increase in the tariff when we are already exporting the electricity at the cheaper rate than we pay. If the reason for the BPC & DHI is to generate more revenue for further investment through export and proper usage of the electricity I feel it is morally wrong for the decision making body. The hike in the tariff will have the following implications
    1. Due to hike in the electricity it will have far reaching implication in on the commodities in general where electricity is prerequisite for manufacturing.
    2. The manufacturing company requiring electricity will have to pay more charges forcing them to shut down and those on tax holidays. This will have negative impact on employment opportunities both for the employer and employee.
    3. The middle income group will have to dig deeper into their pockets who have to pay more than 50% percent of their salary and other loans, to get malnourish and look for other source of income by any means. The promise of raising salary is to pay the hike in tariff.
    4. The hike seems to generate to fund 25% of the Capital budget required to fund the DPTs manifestos get implemented. This will make Bhutan an abundant energy country with huge poorer population.
    5. The green Bhutan would be again be walking back to use more fossil fuel or woods.
    6. If it for investment into bigger projected why not wait for other power projects to be completed.
    7. The price hiked will not and never be once again brought down…it is sure.
    8. If BPC wants to ensure for power saving why not distribute electricity saving bulbs.
    9. Hike will only increase the profit level of BPC to declare bonuses to the staff and management and image of the company high leaving the larger section of the population already poor poorer.

    Hope any authority approving the rate would see the broader picture not only with two reasons for revenue generation and proper usage of power.

    • No wander why people engage in corrupt practices. I am also planning to do similar things if rates as proposed comes through.
      Sample calculation for the gr.6 people in government.
      A. Income
      1. monthly salary 22,000.00
      B. Expenditure
      1. House rent 10,000.00
      2. Electricity if it gets through Nu. 2400.00
      3. TV 300.00
      4. Water 200.00
      5. Tax Nu. 2520
      6. Health contribution 200.00
      7. GIS 660
      8. Mobile 700.00
      9. Monthly rice 600.00
      10. Vegetable 800.00
      11. Children education 300*2=600.00
      12. Clothing for family 300*4=1200.00
      13. Load for 2 lakhs Nu 4500.00
      Balance = -2700.00
      So from where i will get this 2700.00?????????
      I had to do some corruption or hang myself la.

  3. BPC is a greedy Company. If they want more money they should request government to reduce dividend demand. BPC already earns huge amount of money as profit and by increasing the tariffs i think they want more profit to declare more bonus to their employees.

  4. such proposal can only come from the persons who does not feel the pinch of others and especially the poor. How can some one come with such proposal when power in bhutan is generated by the rivers which were the property of people and not DHI or BPC or DGPC. These people in DHI, DGPC and BPC will not feel the difference because they are paid hefty salary, get free electricity quota and what not. It is the common people who will suffer. 
    What we were thinking is that the present tariff is also high that is why many people resort to gas for cooking and bukhari for heating. To encourage bhutanese people to use clean energy, the tariff should be brought down instead. The country which produces excess power and putting such hefty tariff is something no one will appreciate. 
    In Arab countries, the oil price is less than water because they produce oil. Petrol and diesel price in Qatar, Dubai, Bahrian and Saudi Arabia is almost 50 percent cheaper than in Bhutan. What is this DHI, DGPC and BPC talking of?

    The new government will surely look into this, bcos, they are people’s people as they claim to be in the campaigns. DHI, DGPC and BPC are just business minded corporation and not for people without realizing that they are there because of the Bhutanese people. It is also high time to change most of the people in DHI & DGPC now. New government if comes into power will certainly look into revamping the management of DHI, DGPC and BPC

  5. Plez pay tax and be good citizens….if we can’t pay, lets use less

  6. wow what an idea, Sir ji!
    first make the people dependent on electricity, by minimizing the tax on electrical goods and discouraging firewood.
    then when people are adapted with electrical cooking and all, rise the power tarriff, i think its high time that people come out in force and take the advantage of Democracy…
     

  7. Electricity is not a luxury It is basic necessity for cooking and space heating low income group like us.Even in developed countries, government is providing electricity at subsidised rate, I don’t understand what is the reason behind for increase in tariff rate in Bhutan.Did they really do analysis on long term  consequence while only aim of  BPC, might be to generate revenue, but they should also consider how many of us can afford it in GNH Country. In the rural area, if the increase come into affect, most of the people might go back to illegal firewood collection from nearby forest increasing pressure on our  vegetation reserved.There will be also series of direct and indirect health impact on society from this increase and when people’s health is gone, this small revenue generation will be negligible when compared with the recurrent expenditure from this consequence.Many scholarly articles are proven it.Therefore BPC,do thorough research when coming up with such proposal, otherwise i don’t see use of highly qualified people sitting there and without any base coming up with such proposal.Seriously, there is need for  expert committee from different field such as economist, public health expert, forestry, energy etc to look at the pros and cons of such proposal on the general public rather than blindly coming up with such proposal

  8. Shame on Bhutan!!!!!!!!!!!! Shame!!!! what a shame!!!!!!! A country, which claims to generate quite a large amount of hydroelectricity, can’t even give service to it’s own people?? Whose bloody idea is that??? Sacrificing lots of nature in building hydroelectric power stations, for what?? to increase tariff for the people of bhutan????

  9. Isn’t it like, cutting a lump of meat from one’s own lap and letting him buy that meat??

  10. BPC is trying to suck the blood of Bhutanese law abiding people. Don’t make people angry until they come out and stone at your office. 

  11. 1] 0 – 100kwh from 0.85 to 1.00 = 15% raise
    2] 101 – 300kwh from 1.62 to 4.10 = 60.5% raise
    3] 301kwh and above from 2.14 to 4.10 = 47.8% raise

    The proposal above proposed by either DHI/BPC is not practical and acceptable at all. They really have targeted to squeeze the life of the citizens in the name of generating revenue. The raise is welcomed but not to this extent. This is too ambitious and burden falls at sudden. Bhutan being a mountainous country is blessed with forced running water which produces energy and that is the cheapest thing that available for its citizens by its nature. But BPC irrespective of whether they are monopoly or not, they can not suck its citizens to fulfill their corporate mandates. The social mandates are also to be kept in mind. BPC can not argue that we are paying least the tariff in the region but that was how we are blessed with abundant mountains, terrains, snows and rivers which generates electricity. The construction cost of hydro power plants in bhutan is much much lesser compare to other plain neighboring countries around. Thats the reason we have our tariff differences and that has to be maintained. BPC should re-look and reconsider its proposal and the concerned authority should really analyze the impact.

    • drowang,
      You got the maths wrong, For commong people
      1] 0 – 100kwh from 0.85 to 1.00 = 17.7 % increase
      2] 101 – 300kwh from 1.62 to 4.10 = 153.1% increase
      3] 301kwh and above from 2.14 to 4.10 = 91.6 % increases

      For rich industrialist;
      1.54 to 1.20=22 % decrease

      For medium industries;
      32.9 % decrease

      I guess is for rich industrialist in Bhutan, and those industrialist are already drowing in billion.

  12. Increase the tariff for Industries and remove subsidies for them instead of increasing tariff for common people. These Industries are pampered to no limits and no visible benefits have been seen so far. Just few benefit and we know who they are.

  13. Increase the e/tarrif to India from Nu1.98 to 6.00.That is the only option to resolve the Ruppe and Financial Crisis considering the hidden 9% simple  interest imposed upon the 60 % loan provided to us.

  14. It will badly affect middle and low income group of people if the proposal gets through. A little raise is okay, but the one proposed by the BPC seems very huge. That means an average household have to pay at least Nu.1500 a month especially in winter..Just my thought…

  15. Replace all the hard headed guys who wants to promote themselves and those who treat the company as their own company. 

  16. Government shoud not accept such proposal at any cost….rather government should reduce subsidy from profit making companies…..As its quite known fact that subsidy subside the income from citizens…

    So rather ther should be cut in rate to citizen and cancellation of subsidy….The interesting thing is none of the party promises on such things…

  17. DPT has a wisdom and surely the DPT government will not approve the proposal. Instead, the tariff increase will be very minimal. 

    If PDP wins, there will be not increase in tariff. 

  18. Daktsho,

    Thanks for correcting my calculation and we just hope BPC and other concerned agencies are looking into our comments of concern. Otherwise, it will be far cheaper to use Gas for cooks and candle for lights….

    • The tragedy is that…the price for the gas cylinder has also gone up now..check the status of kuensel online it says “LPG price to more than double from tomorrow. A cylinder will now cost Nu 1,196 from Nu 504.”

  19. It is indeed a very sad news for the citizens of Bhutan…The middle class families are left with no options…lets say that the people living on the countryside can at least manage with the firewood but what about the people living in the urban areas…we are no more using the bhukaris and we are purely dependent on the electricity for almost everything. The families where only one person earns and is responsible for running the entire household, imagine how can he/she manage. The prices of the groceries and the vegetables has already gone up due to the rupee crisis and this is the second shock now. I wonder if the government would intervene in this matter because it may not be considered as a serious issue by the people who earn quite enough but for at least 80% of the Bhutanese population it can be considered equivalent to a natural calamity…and yes we are soon going to become the victims. 

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