Imperative for early setting up of new power plants
Monday, 19 November 2007
IT would be an understatement to say that power provides the most vital infrastructure for economic growth of the country. The 11-hour blackout across the country caused by the devastating cyclone Sidr from the Friday morning until the early hours of Saturday has again proved beyond doubt that power is the lifeblood of the economy and the modern life. Unfortunately, even all these years after independence, Bangladesh has not been able to put an end to its uneven race between demand for power and its supply from the existing generation units.
Whereas with growing urbanisation, the demand for power is increasing by leaps and bounds, its production has remained stagnant over the years. In fact, the governments of the past, in spite of their pledges, did little to bridge the gap between rising demand for, and supply of, power. During the immediate past government, the situation turned for the worse. Though the government was largely to blame for the failure to improve the situation so far as production of power is concerned, the big investments necessary for building standard size generation plants were not forthcoming from multilateral donors either. The priorities of such donors for investment have also undergone changes over the time. For example, in the past their prime focus was more on big infrastructure projects than on other sectors. Sometimes, they concentrated on financial sector reform, while at others on poverty alleviation. Apart from these, certain technical issues like the non-transparent tendering procedure as well as the political interference thereof in the process leading to setting up of power plants in Bangladesh, corruption and such other issues did also play their part to discourage the multilateral capital donors from financing power projects here in the recent past.
However, of late, there has been a change of heart regarding the outlook of such donors for power project funding in Bangladesh. That is why after suspending its pre-negotiation process for financing power projects in last June, one of the key multilateral donors -- the World Bank(WB) -- has again resumed talks with Bangladesh to provide a $275 million loan for an integrated energy and power sector development project. Meanwhile, a WB team visited Dhaka in the first week of this month and held talks with the government on the issue. If everything goes as per schedule, the loan agreement is expected to be signed in May 2008.
Needless to say, Bangladesh at the moment is facing an acute supply shortage of power which is to more than 1,000 MW. In absence of fresh power generation units to meet this gap, the government agencies dealing with generation and distribution of power are trying to manage this ever widening gap through load-shedding and other means. This is causing suffering to the consumer public, on one hand, and hampering the growth of business and industry, on the other. As a consequence, prospective foreign investors are being increasingly discouraged to start their business ventures in the country. Against this backdrop, the WB, the Asian Development Fund (ADB) and the government of Japan had, according to reports, pledged fund in the power sector last year. In this connection, the ADB last June committed US$465 million to set up two power plants having a total production capacity of 300 MW. Now that the both multilateral and bilateral donors are responding to requests for funds to set up new power plants in the country, the government should take effective follow-up steps to finalise the deals for the purpose. That would enable the country to raise production capacity and to reduce the power gap significantly.
Whereas with growing urbanisation, the demand for power is increasing by leaps and bounds, its production has remained stagnant over the years. In fact, the governments of the past, in spite of their pledges, did little to bridge the gap between rising demand for, and supply of, power. During the immediate past government, the situation turned for the worse. Though the government was largely to blame for the failure to improve the situation so far as production of power is concerned, the big investments necessary for building standard size generation plants were not forthcoming from multilateral donors either. The priorities of such donors for investment have also undergone changes over the time. For example, in the past their prime focus was more on big infrastructure projects than on other sectors. Sometimes, they concentrated on financial sector reform, while at others on poverty alleviation. Apart from these, certain technical issues like the non-transparent tendering procedure as well as the political interference thereof in the process leading to setting up of power plants in Bangladesh, corruption and such other issues did also play their part to discourage the multilateral capital donors from financing power projects here in the recent past.
However, of late, there has been a change of heart regarding the outlook of such donors for power project funding in Bangladesh. That is why after suspending its pre-negotiation process for financing power projects in last June, one of the key multilateral donors -- the World Bank(WB) -- has again resumed talks with Bangladesh to provide a $275 million loan for an integrated energy and power sector development project. Meanwhile, a WB team visited Dhaka in the first week of this month and held talks with the government on the issue. If everything goes as per schedule, the loan agreement is expected to be signed in May 2008.
Needless to say, Bangladesh at the moment is facing an acute supply shortage of power which is to more than 1,000 MW. In absence of fresh power generation units to meet this gap, the government agencies dealing with generation and distribution of power are trying to manage this ever widening gap through load-shedding and other means. This is causing suffering to the consumer public, on one hand, and hampering the growth of business and industry, on the other. As a consequence, prospective foreign investors are being increasingly discouraged to start their business ventures in the country. Against this backdrop, the WB, the Asian Development Fund (ADB) and the government of Japan had, according to reports, pledged fund in the power sector last year. In this connection, the ADB last June committed US$465 million to set up two power plants having a total production capacity of 300 MW. Now that the both multilateral and bilateral donors are responding to requests for funds to set up new power plants in the country, the government should take effective follow-up steps to finalise the deals for the purpose. That would enable the country to raise production capacity and to reduce the power gap significantly.