HV/MV industries get demand charge concession

15 May 2020

Source: Kuensel

Industries and business establishments across the country with High Voltage (HV) and Medium Voltage (MV) energy consumption capacity will now get three concessions on the demand charge bills of the electricity tariff.

This is as per the finance ministry’s May 6 approval of a new billing arrangement on the demand charges.

HV establishments such as ferrosilicon industries in Pasakha industrial estate, including those in eastern Bhutan, including MV industries such as mining companies, wood-based manufacturers, hotels, hydroelectric power projects, beverages among others across the country will benefit.

There are at least 18 HV and more than 60 MV industries.

With the new arrangement, the demand charges will be levied as per the actual usage for the month of April, May and June this year.

Usually, industries with HV and MV consumption reserve certain energy packages with Bhutan Power Corporation (BPC). Even if the company does not use all the blocked energy, it will still pay the demand charges for the unused energy.

For instance, if an industry blocked 20,000kilo-volt ampere (kVA) or 20megavolt ampere (MVA) per month with BPC but used only 15,000kVA, it will still have to pay for the 5,000kVA that goes unused, including the used 15,000kVA.

But now, for the three months, industries will just pay for the “actual” usage.

In Pasakha, there are companies that consume about 18MVA to more than 40MVA. This, considering the existing HV demand charge tariff rate of Nu 292/kVA/month means paying monthly bills ranging from Nu 5.2 million (M) to Nu 11.6M.

Monthly, HV industries pay more than Nu 80M in demand charges bills to BPC, while MV industries pay more than Nu 12M. MV industries are charged a demand charge tariff of Nu 325/kVA/month.

Secondly, the government has decided to defer the payment of demand charges for the three months of April, May and June this year.

The government also has waived off the late payment penalty for these three months, including the month of March.

Many of the key sectors that contribute to the country’s economy are down amidst the coronavirus pandemic. However, despite challenges industries in Pasakha are still operating. A Standard Operating Procedure has been initiated to give safety the highest priority while the industries kept operating.

However, considering the overall impact of the Covid-19, business is still down with just minimal consignments making their way out.

Although exports to India continue, it has become difficult for the industries to receive the payment, which eventually affected the working capital.

Starting from April 21, industries also have been given access to more than Nu 500M in short-term working capital loans to import raw materials.

The Royal Monetary Authority launched the monetary measure as part of its push for financing to help the industrial sector deal with the impact of the Covid-19 pandemic.