The interim government headed by Dr Muhammad Yunus has been reviewing the activities of various ministries along with other important issues related to law and order situation and macroeconomic management of the country. Secretaries of the ministries of the government are now busy preparing position papers on the priority issues of their respective ministries requiring policy decisions of the government.
Power and Energy Divisions of the Ministry of Power, Energy and Mineral Resources are now in a difficult situation due to shortage of both greenback and local currency. The payment of pending bills against the import of liquid fuel and LNG, purchase of power from neighbouring countries and capacity charges of the private power plants remains a major pressing issue for the government.
As reported by the Bangladesh Power Development Board (BPDB), there are grid connected installed power plants having a cumulative 28,089 MW power generation capacity. Among them 62 plants with 11,246 MW (40 per cent) capacity are installed in the public sector (BPDB, EGCB, APSCL, NWPGCCL, RPCL, B-R Power Gen and CPGCBL). Two power plants that are joint venture initiatives (BCPCL and BJFCL) have been installed with a cumulative capacity of 2,468 MW (9 per cent of total generation capacity). Private sector has installed 87 power plants with a capacity of 11,718 MW (42 per cent of installed generation capacity). In addition, 2,656 MWs electricity are being imported from India under contracts with BPDB (9 per cent). It was reported that installation of 27 more power plants with a total capacity of 9,277 MW is nearing completion. Clearly, the country does not have any problem with power generation, rather the question that is troubling every mind is how to rationally utilise the installed capacity.
Generally, the average daily demand for power is around 14,000 MW during the peak hours. On April 30, 2024, there was the record high generation and consumption of 16,477 MW power in Bangladesh (during the peak hours). It is clear that a huge reserve margin of installed power generation capacity has been created during the recent years, but there were little efforts to analyse why the unutilised power generation capacity remained idle and how far the country would be able to pay the capacity charges to the private power plants.
Also, some power plants installed under various loan agreements in the public sector need funds for loan and interest payments. A few of those plants remain idle or operate well below their capacity due to non-supply of primary fuels.
Experts in the relevant sector believe that installation of 25 per cent maximum reserve margin would have been sufficient for ensuring stable power supply system in the country. The wasteful resource allocation and flawed planning have pushed Bangladesh Power Development Board (BPDB) into serious financial crisis. Former State Minister for Power, Energy and Mineral Resources Mr Nasrul Hamid had informed the now- dissolved parliament a few months back that the government had to pay Tk. 1.0 trillion in capacity charges over the past 13 years. Energy sector analysts believe that the huge capacity charge obligations of BPDB have contributed to higher power generation costs. Repeated power tariff increase could not help BPDB become financially solvent. BPDB has now nearly US$ 5 billion worth outstanding payment obligations. The immediate past government while approving the national budget for the financial year 2024-2025 allocated Taka 400 billion as subsidy for the power sector. Clearly, the subsidy allocation is not enough for the BPDB to meet its soaring budget deficit.
Sector experts, independent research organisations and policy analysts have been offering suggestions to focus on various issues related to power and energy sectors. It is important to analyse why the over capacity of power generation (more than 40 per cent) have been created and who are accruing benefit from it. It is also important to see whether the installed power generation capacity related data are authentic and if the basis of capacity charge payments are based on authentic reports on plant-wise real generation capacity and their idling hours.
It may be mentioned that data tuning and use of inaccurate and obsolete data by the government departments have been causing problems for the decision makers not only for economic management but also for making development plans for various sectors. Economists and researchers have been raising concerns about the quality of official data. Dr Salehuddin Ahmed, the Finance and Planning Adviser of the interim government, in a meeting held on August 13, 2024 assured that 'accurate up-to date data on economic and social indicators will be released'. He further added that 'discrepancies in economic indicators will no longer occur'.
An unbiased power and energy sector review, rationalisation of power plants installation initiatives and reserve margin justification is urgently needed. The government may consider re-negotiating tariff under existing power purchase agreements (for those plants who have failed to meet their implementation deadlines) and penalising the contractors for their non-performance.
Besides, it is very much important to conduct necessary scrutiny of the costs involved in the implementation of large-scale power projects in public sector within the scope of government to government agreements in the past. Media have been revealing financial irregularities in the implementation of 'mega projects' and the lack of transparency. For instance, media report revealed that implementation of four large coal fired power plants in the country involved a cost of about Tk. 1.25 trillion. Of that amount, allegedly, Tk.617 billion was either wasted or misappropriated. Only professional assessments may find out the actual cost of large power plant projects that were implemented bypassing the competitive bidding processes.
Mushfiqur Rahman is a mining engineer. He writes on energy and environment issues.
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