Audit: Decreasing consumption of electricity among low voltage users and increasing household expenditure on electricity coupled with increase in usage of energy from other sources could be attributed to the raise in power tariff making electricity unaffordable.
This was one of the findings of the Royal Audit Authority (RAA) in its performance audit on hydroelectric energy conducted in 2013. The RAA has recommended to conduct a study to know the causes of the rise in use of energy from other sources.
It has also recommended the Bhutan Electricity Authority (BEA) to study and review policies on tariff determination.
The Public Accounts Committee (PAC) of Parliament presented its findings on whether the recommendations of the RAA have been implemented yesterday in the joint sitting,
The PAC reported that by improving access to electricity in the rural areas and subsidising the electricity price to ensure affordability, the recommendation has been implemented.
However, due to limited data available on household income, the audit could not conduct a study on the affordability of hydropower energy. RAA has therefore recommended the economic affairs ministry to conduct the affordability and energy poverty study.
In addition there was also another recommendation to fix a tariff ceiling whereby tariff should not exceed a certain percentage of household income.
While this recommendation is not implemented, the ministry responded that electricity is made affordable to low and medium voltage users by providing a subsidy. The 100 units of free energy in the rural customers, the reported stated is to enhance living standards and promote income generating activities in the rural areas.
The RAA had also found that profitability of the Bhutan Power Corporation (BPC) has been significantly impacted by the successive revision in energy tariff.
It was however found that 37 to 42 percent of BPC’s revenue came from other income such as construction contracts, which is not directly linked to electricity tariff. Part of profit can also be attributed to increased sales.
The discussion on the issue revolved around the need to amend the Bhutan Electricity Act. Panbang’s represnetaive Dorji Wangdi proposed this recommendation.
The education minister Norbu Wangchuk however said that there is a separate resolution from the house on the need to review the Act. He said that the economic affairs ministry is in the process of reviewing the Act.
The PAC however found that 4 of the 12 recommendations on hydropower were implemented, seven were partially implemented and one was not implemented.
The committee’s recommendation was to expedite the review of the sustainable hydropower development policy. It has also recommended the economic affairs ministry to facilitate greater coordination among the hydropower project implementing agencies like Druk Green, BPC and BEA.
The PAC has also presented its observation and implementation status of the recommendations on three other performance audits conducted between 2010 and 2015.
The committee upon reviewing the responses of the agencies on the recommendation made by the RAA, found that significant work has been done to address the audit issues. “Some of the recommendations will require more time for implementation due to nature of activities,” the PAC report stated.
The house also discussed the implementation status on the resolutions of the fifth session with regard to an audit on public debt management, wherein most of the issues were addressed with the formulation of public debt management policy.