Differences ironed out

Most of private sector’s submissions on draft domestic electricity policy considered

Electricity: The economic affairs ministry would relook at the electricity tariff determination model and come up with a model that best suits the country.

This was one of the main outcomes of the consultation meeting between the private sector and ministry yesterday.

Although officials from Bhutan Chamber of Commerce and Industry (BCCI) said almost 90 percent of private sectors’ submissions on the domestic electricity tariff policy were accepted by the ministry, the details of the discussion could not be established as the Chamber requested media houses not to attend the meeting upon ministry’s instruction.

The secretary general, Phub Tshering said it was a successful meeting where many misunderstanding were cleared.

On the pricing, he said that the government has justified that the current pricing model is not a rigid cost plus model. “It is a hybrid of price cap and cost-plus,” he said. The draft policy however states that the cost plus model would be applied to determine the tariff.

Under cost plus pricing, the direct material, labour, and overhead costs for a product with mark up profit margin is added to derive the price of the product while price cap regulation sets a cap on the price that the utility provider can charge.

The private sector representatives dropped the proposal of allotting subsidy to the high voltage industries since it is under the scope of economic development policy, which is being revised.

But he said the government also agreed to look into providing subsidy to the cottage and small industries in the rural areas.

The tariff revision is pre-determined on three-year cycle basis, irrespective of economic conditions. In the earlier meeting among the private sector, representatives said the draft power tariff policy should allow the government to intervene on the tariff structure that may be demanded by economic situation.

The ministry has justified that electricity may not be the sole factor that downturns the industries and that it could be the raw materials or market.

Phub Tshering said the discussion along this line gave rise to an idea of framing an industrial development policy, which the government would consider soon.

He also said that as the electricity Act and hydropower policy are being revisited, there are lot of rooms to address the issues that the domestic electricity tariff policy doesn’t cover.

After incorporating the suggestion and feedback, the policy would be forwarded to the Gross Nation Happiness Commission for the screening test.

Phub Tshering said the chamber is hopeful that the domestic electricity tariff policy would come into force by end of this year, so that there will be more clarity in next cycle of tariff revision, that takes effect from July 1, 2016.

Tshering Dorji

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