Darkness at noon

The title of Arther Koestler's eponymous novel was a political metaphor. But for millions of Bangladeshis who cannot afford generators to supply electricity, it has become an everyday reality for past several weeks, perhaps months. The shortage of power has become chronic, causing immense hardship to ordinary families and inflicting loss of production to power-dependent manufacturing companies and business concerns. FBCCI, the apex business and industrial organisation in the country, has recently warned of the dire consequences of power shortage on foreign direct investment (FDI) in the country.
Given the comfortable power generation enjoyed by the country for the past decade or so, the present creeping shortage in power supply is perhaps a nightmare. The reality of the situation has come as a shock, for the government as well as for the consuming public. Beginning with a measly coverage of 40 per cent of consumers in 2008, the country reached 100 per cent coverage in less than a decade under the watch of the present government. It stood out as the signature achievement of the present political regime, ushering in a subsequent period of rapid economic growth, leading to nothing less than an economic miracle that earned plaudits from all concerned, at home and abroad. The present government could be excused for the effervescent mood engendered by this phenomenal success in the face of heavy odds. A bold and aggressive policy for energy sector development saw the passage of Speedy Supply of Power and Energy (Special Provision) Act, 2010 facilitating the participation of Independent Power Producers (IPP) who set up rental power plants in the country. Though criticisms have been made about the high cost of power generated by these power plants by many, the pubilc-private sector combine (PPP) in the energy sector was a brilliant idea of the policy makers to overcome the stasis in public sector power generation.
That the PPP in energy sector should falter and flounder now, after all these years of shining success, has come as a a rude shock. The State Minister for power and energy has cited the crisis in the international energy market as the cause arising out of the Ukraine war, particularly the sanctions slapped against Russia by America and its allies. There has been some turbulence in supply and volatility in prices in the wake of this development but before long readjustments followed in the international market for supply of oil and oil products like gas, diesel and furnace oil. Bangladesh, like many other countries, has had little difficulty in readjusting to this evolving energy regime. As a result, there has been very little problem, if at all, from the supply side. The crux of the problem is seen to lie in Bangladesh's effective demand i.e., in its payment practice. The bulk of diesel, gas and furnace oil and coal used for power generation has been obtained from suppliers on deferred payments. Incredible as it is, Bangladesh has failed to make payment for these within deadlines; incredible because it has never failed to make timely payments to overseas creditors of any ilk.
The Bengali and English dailies in the country have been publishing news about non-payment of dues to suppliers of coal, oil, gas and diesel for quite some time. A few weeks back it was reported that the coal-powered power plant at Pyra had to shut down one of its two units, forgoing about 600 mega watt of electricity. Newspapers have now reported that its second unit had to be shut on June 6 as suppliers have insisted on clearance of arrears. For similar reasons, the coal-based power plant at Rampal had to be shut recently. In the May 30 issue of the Financial Express there was a headline news about 'uncertainty in power sector over payment backlog'. On June 6, the Bengali daily Amader Somoy ran a headline reading: 'power crisis because of non-payment of dues'. The amount of arrear in dues has been estimated by the paper at $ 3 billion . The Financial Express, in its headline news on June 6, gave detailed breakup of the agency- wise arrears in payment for imports of oil, gas etc. According to the news, the state-owned Bangladesh Petroleum Corporation (BPC) owes around US$ 300 million to different refined oil suppliers as of May 16 this year. The overdue payments to US oil company Chevron and Singapore's KrisEnergy against gas purchase from their share of the output in Bangladesh gas-fields amounted to US $ 220 million. The state-run Petrobangla has not been able to pay to these two suppliers since September 2022, that is over a period of nine months due to dollar shortage. For the same reason, Petrobangla has been unable to pay global LNG suppliers. It has been mentioned in newspaper that the Corporation owed around US$ 100 million to LNG suppliers. Payment of arrears from Pyra Power plant for coal reached US $ 309 million while dues from Rampal Power Plant for import of coal amounted to US $ 40 million, the newspaper said. The payment backlog to privately owned IPPs amounts the highest, to the tune of US$ 1.7 billion. According to the IPP Association president, many private sector power plant owners are unable to import furnace oil because of six-months-plus receivables and shortages of US dollars in commercial banks. Private sector accounts for around 80 per cent of the total oil- fired power plants in the country. The IPPs have exhausted their credit limits with banks due to Power Development Board's inability to make timely payment. Foreign confirmation banks, too, have exhausted the country limit, the IPP president said (Financial Express, May 30). Bangladesh has at present the capacity of about 28000 mega watt of power, both in the public and private sector.
According to news at night on June 6 in television channels, the generation of power up to that night was13500 mega watts as against the demand for 15800 mega watts. This may be an estimate on the lower side because this paltry shortage cannot account for the countrywide power outages for such a long time. Prevailing power shortage was discussed in Jatyo Sangshad on June 6 when pro-government opposition members from Jatiyo Party made vehement criticisms over the failure of the government to supply power to the public. In response, the State Minister for Power and Energy said the power shortage was because of global energy crisis and that the problem would be eased by June 13 to 23 after supplies from Payra is resumed and first delivery is made by Adani Group.
The analysis of news published in national dailies makes it amply clear that the power shortage (of whatever magnitude) in the country in recent months has been due to non-payment of arrears to suppliers. The foreign exchange reserve of the country has been used for payment of sundry import bills and other overseas dues, though it has dwindled the total amount from US $ 48 to US $ 29 billion now.
The payment for a priority item like inputs for power generation cannot be held up now or ever on the ground of shrinking reserves. If the IMF conditionality is standing in the way, it should be changed through re-negotiation on the ground of emergency. After all, the IMF loan is meant for bail out in a foreign exchange crisis.
Electricity has become essential not only for consumer welfare, it is vital to keep the wheels of business and industry running. Setting an ambitious target of 7.5 per cent GDP growth and not paying for power generation uninterruptedly do not go together. If the ' crisis' can be overcome now within two weeks, as the State Minister has assured, why has it been allowed to occur in the first place? Moreover, the crisis was not unforeseen and sudden, it took time to metastasize. There was enough time to nip it in the bud.
The infrastructure for power generation has been put in place, the capacity to generate power has been installed at great costs. Not to use this for lack of inputs that are in plentiful supply in international market is nothing short of a case of arteriosclerosis in emergency policy making.

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