English | Dzongkha Sunday, September 23, 2018

Power Tariff expected to increase next month

Jun 25, 2013

Power-Tarrif-to-increasePower Tariff is expected to increase this July. Two power companies, Druk Green Power Corporation Limited (DGPCL) and Bhutan Power Corporation (BPC), have proposed for a revision to the Bhutan Electricity Authority (BEA).

Under the Bhutan Electricity Act 2001, the revision of power tariff takes place once every three years. DGPCL, who sells the power to BPC for domestic market, proposed for a revision of the domestic generation tariff.

Druk Holding and Investments (DHI), who holds 100 percent of shares in DGPCL and BPC, said the revision is long overdue considering the contributions they make to the economy. The generation tariff of Nu. 1.20 per kilowatt at present was set way back in September 2007.

“Only a small percentage of revenues from Power go to the maintenance of different power plants. Nearly 95-97 percent of the revenues from power go directly to Ministry of Finance. You may find only 5-3 percent being used for maintenance, payment to the staff and purchases,” said DHI’s Chairman Lyonpo Om Pradhan. He also said there is a loan repayment that we have taken to establish these plants. So it is like borrowing money to pay back and payment is going to come from revenues. It is not going to come from any other source.”

In the current proposal, the DGPCL has proposed the generation tariff of Nu. 1.99 Per kilowatt. The DGPCL has taken four factors while proposing the revision and one of these is allowance for higher cost of equity. Currently the DGPCL is allowed only six percent which is one of the lowest rates in the region.

“If you take into account the inflation at present time, which is about 9 percent, I think asking for 12 percent or 16 percent or 15.5 percent is really realistic on our part.,” said DGPCL’s Managing Director, Dasho Chhewang Rinzin. He also said at 6 percent they are making loss. “We are earning a return of 6 percent whereas inflation is already 9 percent. So unless you can match the inflation with your returns, you are actually making a loss in terms of real money.”

However, the Bhutan Electricity Authority said after going through the proposal, there were some inconsistencies.

“They compared it to Central Electricity Regulatory Commission (CERC) India but that rate was it has condition attached to it. It is not that you pay 15.5 percent to all of the equity that you have,” said BEA’s Chief Executive Office Samdrup K. Thinley. “Here they have proposed in a different manner while they picked up the same rate but they have applied over the whole equity. Therefore they need to do some correction here. The reason why they kept a cap of 30 percent of the equity is because the cost of equity is quite high. And if we allow it then the tariff will go up.”

The proposal also included the costing on investment and operational expenses which the Authority said was reasonable. Other factors, in the revision, also include cost of production of royalty energy- which comprise of 15 percent of total power generation-, and cost of power import. Bhutan produces 7,000 million units of power from the 1,480 Megawatt installed power plants. These proposals from Druk Green Power Corporation Limited and Bhutan Power Corporation, which were submitted in April to Bhutan Electricity





8 Comments for “Power Tariff expected to increase next month”

  1. Dhokdola

    DGPC and DHI boss talks as if even the common peoples salary has increased in leaps and bounds… With the inflation already let us survive. Think of the lower income people in general. Increase you MUST…but be logical and considerate when you do so.. PLEASE….

  2. rohngf

    “Power Tariff expected to increase next month”…..it will be gross violation of electricity act if it is revised without having any government…Interim government has no authority to approve such tariff…in fact, it should go to parliament for approval….To be precise, low voltage customers are highly subsidized through royalty energy and only “minister” or “government” has authority how much to subsidize or not…most importantly, it is high time that electricity act should be amended.

  3. Namgyel

    DHI, DGPC and BPC makes millions of profit every year. Why do they want to increase the tariffs. That shows the greediness.

  4. PUDO

    DGPC and BPC can come up with new ideas and technologies to reduce maintenance and operation cost to keep the tariff low. Please take into account whether average income of an employee working in government or private organization…people of Bhutan has every right to get electricity at low tariff…water is Bhutan’s natural resource.

  5. Gortala

    Cut down the salaries of the staff including DHI. They are paid more than the ministers I guess. What abnormal contribution are they making except reaping huge benefits? I don’t think they toil 24*7 to make sense of their benefits. They are like any other offices doing their own work. They do no magic and are not miraculously born. Only then we can expect fair share of our resources. Now it is only the common people who will be affected worst because their income is either stagnant or see gradual increase. When even business people object to their inability to pay for the increase how can common people pay for the increase. Business people make huge profits but it is only common people who suffer the brunt of such ill-informed decisions.

  6. Namchung

    Hi DGPC and BPC,

    For time being think about the situation of our country is going through it. Yes it is a high time to hike the tariff pertain to power.

    It is an unheard voice of the general public for the beneficial of as whole.

  7. sangay

    DHI, DGPC and BPC
    Instead of Power Tariff should be reduce, when lot of hydro power comes up. I don’t know why DHI chairperson financial desire is not full fill. He told to BBS last time, when DHI companies meeting held in Taj.DHI target was not full fill, due to not revised the power tariff. Is that the way, how to serve the nations. I know, though power tariff proposal coming from DGPC and BPC, but main source of Power tariff comes from DHI.
    If Power Tariff goes increased then, all the companies under DHI/others offices should increase the salary of employees.

  8. Sonam

    DGPCL should think of increasing power cost outside Bhutan and reduce cost for Bhutanese consumers. But now it is happening just opposite. I think the system within our legislation is good.

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