The government has increased bulk power tariffs by 5 percent, and retail electricity prices by 8.5 percent as part of a series of steps to reduce subsidies to the energy sector.

Power Secretary Habibur Rahman said separate notices were issued on the new rates on Thursday night.

The weighted average of wholesale power price has increased from Tk 6.7 per unit to Tk 8.5 while retail prices have gone up from Tk 8.25 to Tk 8.95, according to him.

“The prices have been hiked more for the customers who use more electricity. The rise is very little for the lifeline customers,” he said.

The government has already issued notices on new wheeling charges and bulk tariffs for the distributors, which are effective from February.

The Power Development Board said in the notices that the hikes aimed at adjusting subsidies on public interest.

Earlier in the day, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the government will have to spend Tk 430 billion on subsidies to the power sector because it was selling electricity at Tk 7 per unit while the production cost was Tk 12.

The Power Development Board estimates the government will still have to pay more than Tk 363 billion in subsidies to the sector even after the price hikes.

Nasrul said power production cost increased despite stable fuel prices in the international market because of the taka’s rapid devaluation against the dollar.