Bangladesh should ensure universal access before cutting its energy subsidy

 

The Bangladeshi prime minister, Sheikh Hasina, has recently confirmed that her government will be looking at removing the energy subsidy when the economy improves. But with high electricity prices and 10% of the population without any form of electricity, is this move a bit presumptive?

As previously written on Why Electricity Matters, Bangladesh has been a leading example for all developing countries to follow as they have turned around their energy access and supply in the past ten years.

Bangladesh has quadrupled its energy output since 2008, increased its power stations from 27 to 121, and has pledged to have 50% of its energy production from coal.

In spite of the improvements to the country’s energy output, there are still 16 million Bangladeshis without any form of electricity; preventing them from accessing better healthcare and better living conditions.

Before the prime minister should even start considering to remove the subsidy, she should ensure that the country reaches 100% access to electricity, meaning that the supply of electricity can equal or outstrip demand, reducing prices that ordinary Bangladeshis have to pay.

Prime Minister Sheikh Hasina has commented that when the economy improves, she will look at removing the subsidy that helps Bangladeshis from accessing power.

Currently, the subsidy reduces the cost of power from Tk6.25 (5.7p) to Tk4.82 (4.4p) per unit.

The average wage is 13,258 taka (£120) per month and the cost of electricity and heating is 2,656 taka (£24) per month. Meaning that Bangladeshis who have access to electricity and is awarded the median wage in the country is currently paying over 20% of their salaries on electricity.

The Bangladesh government should double-down on their commitment of building new on-grid power plants as their first priority.

Only once they have achieved universal access to electricity and given all 163 million citizens this vital resource, can they then look at changing or removing the energy subsidy.