Power, energy sector investments should get topmost priority: CPD
Monday, 7 June 2010
FE Report
Centre for Policy Dialogue (CPD), a think tank, urged the government Sunday to prioritise investment in energy and power as years of sluggish flow of public and private capital to the sector limited the country's ability to pave the higher growth path.
The policy organisation also called upon the government to discontinue the facility of legalising "untaxed" money, saying this should not be supported on fiscal and moral grounds.
At 24 per cent, total investment has stagnated since fiscal 2004, despite 12.7 per cent growth in public investment in the outgoing financial year. Private investment also grew to a modest 10.3 per cent while foreign investment more than halved in the outgoing fiscal.
"One per cent growth is correlated to a rise in investment," said Dr. Mustafizur Rahman, executive director at the CPD.
"We need to boost investment in areas that facilitates investment in other areas. I think investment in energy and power sectors is that kind of investment," he told reporters while releasing the state of the Bangladesh economy at his office in the city.
The power ministry has figured that Bangladesh will require an estimated US$11.5 billion over the next five years to help rejuvenate its ailing power sector. Of the total costs, it will need US$9.0 billion to generate 9000 megawatts of electricity by 2015, while $1.0 billion each for transmission and distribution.
Since late eighties, the country has failed to draw significant foreign investment in power generation, leading to severe electricity shortages, which the World Bank says cost its economy 2.0 per cent of annual growth.
Dr. Mustafiz voiced concern over the gradual decline in power sector investment, noting that the recent 'road shows' in Singapore and New York failed to attract attention of global energy and power investors.
The CPD chief executive stressed on a gradual power tariff hike over five years, keeping in mind fiscal absorption capacity, consumer's interest and demand management. Tariffs were increased by 5.75 per cent in March last.
He, however, made the case for a bigger annual development programme (ADP) as he said higher implementation rate in 2010 fiscal suggests there is a capacity to absorb higher development allocation.
Centre for Policy Dialogue (CPD), a think tank, urged the government Sunday to prioritise investment in energy and power as years of sluggish flow of public and private capital to the sector limited the country's ability to pave the higher growth path.
The policy organisation also called upon the government to discontinue the facility of legalising "untaxed" money, saying this should not be supported on fiscal and moral grounds.
At 24 per cent, total investment has stagnated since fiscal 2004, despite 12.7 per cent growth in public investment in the outgoing financial year. Private investment also grew to a modest 10.3 per cent while foreign investment more than halved in the outgoing fiscal.
"One per cent growth is correlated to a rise in investment," said Dr. Mustafizur Rahman, executive director at the CPD.
"We need to boost investment in areas that facilitates investment in other areas. I think investment in energy and power sectors is that kind of investment," he told reporters while releasing the state of the Bangladesh economy at his office in the city.
The power ministry has figured that Bangladesh will require an estimated US$11.5 billion over the next five years to help rejuvenate its ailing power sector. Of the total costs, it will need US$9.0 billion to generate 9000 megawatts of electricity by 2015, while $1.0 billion each for transmission and distribution.
Since late eighties, the country has failed to draw significant foreign investment in power generation, leading to severe electricity shortages, which the World Bank says cost its economy 2.0 per cent of annual growth.
Dr. Mustafiz voiced concern over the gradual decline in power sector investment, noting that the recent 'road shows' in Singapore and New York failed to attract attention of global energy and power investors.
The CPD chief executive stressed on a gradual power tariff hike over five years, keeping in mind fiscal absorption capacity, consumer's interest and demand management. Tariffs were increased by 5.75 per cent in March last.
He, however, made the case for a bigger annual development programme (ADP) as he said higher implementation rate in 2010 fiscal suggests there is a capacity to absorb higher development allocation.