The Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka has urged the government to immediately drop the provision in the Bangladesh Energy Regulatory Commission Licence Regulations, 2006 imposing licence fee on generators exceeding one megawatt (MW) and also publish a white paper on the measures being taken to reduce systems loss in the power sector.
The MCCI, one of the leading trade promotion body of the country, made the appeal in an editorial of its latest issue (August, 2008) of the 'Chamber News'.
The MCCI said the Power Development Board (PDB) has submitted a proposal before the Bangladesh Energy Regulatory Commission (BERC) to increase the average electricity tariff by 40 per cent citing reasons of increased production cost. It is needless to mention that the move will cost the productive sectors heavily. On the other hand, industries that have arranged for their own captive/stand-by generation facilities at huge costs, are being required to pay licence fee varying from Tk. 0.5 million to Tk. 2.5 million.
"It is necessary to address several key problems faced by the country's power sector. One is the problem of systems loss and make it dependent on government subsidies that divert revenue from important programmes like education and public health," the MCCI said.
It said the systems loss is still very high. Exact figures of loss are unknown but, at approximately 20-25 per cent, the net countrywide systems loss is probably among the highest in the developing world.
The present power crisis, thus, can be significantly reduced by reducing the systems loss. For example, if the systems loss could be reduced by 5.0 per cent it would reduce the country's peak demand by 250MW or more, which means the saving of at least Tk. 10 billion as generation cost (assuming that a 1MW plant costs Tk. 40 million) and Tk. 7.50 billion in transmission cost, resulting in a total saving of Tk 17.50 billion. This would be a real achievement of the power sector.
"Regrettably, instead of giving highest attention to improve the revenue situation through reduction of systems loss, proposals have been submitted for enhancement of the tariff," it said.
The country has been suffering from an acute power crisis for several years. Frequent power outages and load-shedding have become a common phenomenon affecting every sector of the economy.
Currently, there is a power shortfall of about 1500 MW. The exact crisis in different areas, particularly industrial areas, is more severe than what is indicated by the figure of power shortfall. Industries across the country, particularly the medium and small enterprises which cannot afford to have captive/stand-by generation facilities keep on suffering huge losses of production.
In 2000, the government declared "Power for all by 2020" as a national goal. The policy vision envisaged some 5-6 billion US dollars of investment in power generation by 2005 and for an additional 15000 MW power generation, which would be needed by 2020.
The country has not seen any such investment in the sector since 2000. The present production capacity of 4702 MW (actual generation 3279 MW) falls far short of the country's demand for 5500 MW.
The demand has kept on increasing at an annual rate of about
400 MW. The government's Power System Master Plan 1995 estimated the demand for power at about 5000 MW in 2006. A subsequent monograph published by the Power Division showed a demand target of 9840 MW in 2012, indicating the need for creating an additional generation capacity of 4840 MW by 2012, or more than
800 MW every year.
The present government inherited a mismanaged energy sector but during the last 18 months it has done very little to improve gas and power output. It has dropped the Power Sector Master Plan as well as the gas development programme and engaged experts to formulate policies on 'merchant power plants', 'short-term rental power plants', and 'public-private joint ventures', all of which are widely felt to be controversial. In fact, as can be seen in the cases of RPPs, the Power Ministry has begun to open the country to incompetent and unreliable bidders.
No wonder therefore that the amount of load-shedding, which was about 600-1000 MW around the time when the present government assumed power, rose to 800-1500 MW
one year later. According to the Power Ministry sources, out of the 800-1500 MW electricity shortage, 500 MW to 600 MW is due to the shortage of gas.
A serious problem facing the power sector at the moment is its heavy dependence on gas. Currently, 87.05 per cent of power generation in the country is based on gas. Other types of fuel in the generation mix are coal 4.75 per cent, furnace oil 4.49 per cent, hydro 2.49 per cent, and diesel 1.23 per cent. The power sector consumes 40 per cent of the gas supply. The rest is used in manufacturing industries, including fertiliser (32 per cent), production of captive power by companies (12 per cent), domestic usage (12 per cent), production of CNG for vehicles (2.5 per cent), and tea estates and commercial consumers (1.5 per cent). The planning of future power plants on gas alone will cause a gas shortage for these other sectors.
As gas will be in short supply until new gas fields are discovered, and given the imperative need for making more gas available for industrial and other domestic uses, the feasibility of using coal, a relatively cheaper input, for power generation should be seriously considered. The country has reportedly a possible reserve of about 1400 million metric tonnes of coal, which is equivalent to 37 TCF of gas.
The use of coal to generate power does not have universal support, however. Protests have been raised saying that mining coal by using the open pit method will cause damage to environment. Nevertheless, the gravity of the country's power crisis demands that the debate over how to mine coal be quickly resolved.
Coal, like gas, is a non-renewable resource, and hence alternative sources of energy should be explored. The wind, tidal and solar energy have very limited potential. These can at best produce 1-2MW of electricity at present but the country needs big commercial energy plants upwards of 1000MW. As one energy expert has recently said, "We can't solve megawatt problems with kilowatt solutions".
