Faulty policy on power sector blamed for subscribers' woes

M Azizur Rahman The government's 'faulty' policy on the power sector is escalating the woes of electricity subscribers as it could not bring any large base-load power plant online in the past four years, according to some industry insiders. Non-implementation of any large low-cost power plant has led to a bulging subsidy bill in the country's power sector that is being paid to the private power producers, they said. The 'laxity' in implementing low-cost but big base-load power plant projects that has led to the heavy dependence on high-cost rental and quick rental power plants is mainly responsible for this situation, they alleged. Electricity subscribers are bearing the major brunt of it as they are paying an increased amount of electricity bills, they said. The country currently has about 34 oil-fired rental and quick rental power plants, having the total capacity for electricity generation up to 2,433 megawatts (mw). Twenty-three power plants, having a total capacity of 1,956 mw, are furnace-oil-fired and 11, having the generation capacity for 537 mw, are diesel-based. 'Influential' business people, having links with government high-ups, set up most of the oil-fired rental and quick rental power plants bypassing the tender process, some relevant sources told this correspondent. "The intention of the vested interest groups was to make quick money by getting the approvals or awards of rental and quick rental power plants under Speedy Supply of Power and Energy (Special Provision) Act, 2010," former Director General of Power Cell BD Rahmatullah told the FE last Wednesday. Under the law which will remain in force until October 2014, the government has the authority to bypass the provisions under any existing legislation about public procurement and to avoid the normal ways for processing bids through tenders or as to accommodate any unsolicited offer, in the power sector. The legislation states that any activity which comes within its purview, or any official or employee implementing such activities, cannot be subject to any subsequent legal proceedings. "We, the consumers, are paying higher bills but not getting sufficient electricity supply," Mr. Rahmatullah said. A senior official of the state-owned Bangladesh Power Development Board (BPDB) said three medium-sized power plants, having the generation capacity at 150 mw each, started generating electricity during the tenure of the present government. The power plants are the 150-mw Chandpur power plant, the 150-mw Shikalbaha power plant and the 150-mw Sylhet power plant. The previous caretaker and Bangladesh Nationalist Party (BNP)-led four-party alliance (BNP) governments had imitated the process of building all the three 150-mw capacity power plants, said the BPDB official. The present government, however, awarded contracts for several large power plant projects including the 341-mw Bibiyana-I plant, 341-mw Bibiyana-II plant, 335-mw Meghnagahat plant and three coal-fired power plants, having a total generation capacity at around 1100 mw. It will not be possible to bring any of the power plants during the tenure of the present government, on stream and the work on most of these plants is well behind the schedule, said the sources. Officials said with the installation of rental and quick rental oil-fired power plants, the loss of state-owned entities was rising as the costs are getting much higher than the selling prices. The loss in the area of petroleum alone was estimated at around Tk 153.8 billion in the fiscal year (FY), 2011-12, a senior official of Bangladesh Petroleum Corporation (BPC) said. The country's loss on account of running short-term oil-fired rental and quick rental power plants was estimated at around Tk 123 billion in FY 2011-12, he added. The country's lone electricity buyer from the producers -- the state-owned BPDB -- buys electricity from diesel-fired power plants at over Tk 16 per kWh and from furnace oil-fired plants at Tk 14 per kWh. The cost of supplying electricity increased almost three times from Tk 2.62 per kWh in FY 2009-10 to around Tk 6.8 per kWh in the current FY, 2012-13 as the consequences of it. The average bulk electricity tariff has, meanwhile, been raised to Tk 4.70 per kWh and average retail electricity tariff, to Tk 5.7 per kWh. The country's overall electricity generation is now hovering around 6,000 mw against the demand for over 7,500 mw. Experts and businessmen said the increased power tariff caused a higher rate of inflation and increased significantly the cost of manufacturing.