Towards much economic growth
The new electricity tariff for the period of three years from 1 January 2017 to 30 June 2019 has come into effect from this month.
The approved total cost by Bhutan Electricity Authority ( BEA) for Druk Green Power Corporation ( DGPC) generation cost and Bhutan Power Corporation ( BPC)‘ s cost of supply is 2.23 Nu/ kWh for high voltage ( HV), 5.38 Nu/ kWh for medium voltage ( MV), 5.81 Nu/ kWh for low voltage ( LV) and 0.195 for wheeling.
However, the annual tariff for LV of Block I ( rural) 0- 100kWh and Block I ( other) 0- 100kWh will remain the same.
Block II ( all) 101- 300 kWh, Block III ( all) above 300kWh and LV bulk will have an annual increase of three percent from the existing tariff, while MV will experience an increase of 6.50 percent annually.
The government has approved the subsidy allocation of around Nu. 1,772 million per year to maintain the annual tariff increase for LV and MV consumers.
The difference between the government subsidy and BEA approved total cost of supply shall be imposed on the people as electricity tariff.
When 100 units of electricity are free for people living in rural area, the government has to pay an amount of 5.81 Nu/ kWh to BPC.
Article 7.15( 3) of Domestic Electricity Tariff Policy 2016, states that the rural domestic households shall be provided additional subsidy with objectives to enhance the living stand- ards, curb rural to urban migration, conserve the environment, reduce fossil fuel consumption and promote income generating activities.
The cost component with regard to the generation of power will include only the cost of production and the additional cost that does not relate to the power generation has been removed.
In the urban areas, people who consume 0- 100 units in a month will have to pay 5.81 Nu/ kWh instead of 1.28 Nu/ kWh if there is no injection of subsidy from the government.
Unlike LV and MV, HV does not have subsidy from the government.
Article 7.15( 5) of Domestic Electricity Tariff Policy 2016, states that high voltage industries shall not be eligible for subsidy.
While the rural people and the low voltage consumers will be happy with the revised tariff but the heavy voltage consumers will face an increase in the demand charges so that the industries do not hoard the power.
In order to make electricity cheaper the government has been transferring the royalties received from the generated electricity as subsidies to the consumers, under LV and MV category making electricity cheap in order to enhance the livelihood of our people and making electricity affordable.
Overall the revision of tariff seems sensible and pragmatic hopefully lead to much economic growth and development of the country.