Power sector suffers for want of long-term plans
Abul Quasem Haider | Friday, 25 July 2008
Three sectors namely electricity, fuel and mineral resources have emerged as the most important ones in Bangladesh. To develop the industrial sector, the use of gas is essential. Similarly, coal, electricity and other fuels are no less important for industrial development of the country. The government is failing to supply electricity on the doorstep of the general mass even after 37 years of independence. Except for the cities, 90 per cent people are still deprived of electricity. Only 42 per cent of the total population of the country get power supply, which is often erratic. The country is lagging behind the expected industrial development performance owing to failure to produce and supply enough electricity. With enough production of electricity and gas, it will not at all be difficult for Bangladesh to become a middle income country by 2021. Besides ensuring uninterrupted electricity and gas supply, infrastructure should also be of international standard. For this, long-term plan should also be taken on build, own and operate (BOT) basis. It is not possible to do all this depending only on government fund and foreign aid or loan.
After the liberation, appropriate long-term plan was not taken to develop power, fuel and mineral resource sectors. Power sector is failing to meet the demand due to scattered and unwise planning. The production of electricity per head amounting to only 165 KWH is less than many other developing countries.
Of the total net production of electricity, 65.24 per cent was produced by the government sector and 34.76 per cent by the private sector, on an average, in fiscal 2006-07. On the other hand, of the total net production, 85.75 per cent production was gas-based, while 3.65 per cent was hydroelectricity, 4.80 per cent was coal-based and 5.80 per cent was oil-based. Per head production of electricity was 165KWH in 2005-2006 fiscal year. Although, the installed capacity has increased considerably, yet actual production did not increase. Due to shortage of production, actual demand could not be met over the last few years. For the period from 1995-96 to 2006 -2007, the installed capacity, production capacity (achievable) and the highest production is given below:
The system loss of Bangladesh Power Development Board (PDB) for the fiscal 2006-2007 until December 2006 was 7.25 per cent of net production. System loss for the previous financial year was 7.86 per cent. The system loss has, therefore, been reduced 0.61 per cent compared to that of last financial year. Until 2005-2006 financial year, the arrear bills of PDB receivable form different private and government organisations stood at over Tk 45 billion or equivalent to 10.95 months' bill. The system loss, arrear bills and other receivables of PDB for the financial years 1995-96 to 2006-2007 is shown below:
The Dhaka Electric Supply Authority (DESA) was created bifurcating the PDB. In order to develop and accelerate the supply of electricity in greater Dhaka including the Metropolitan area and to establish accountability, the DESA was created by an Act passed by parliament on March 06, 1990. The system loss of the DEDA was 38.20 per cent but it came down to 19.89 per cent in the financial year 2006-2007 (till December).
In the first financial year following the creation of the DESA (1991-1992), it bought 2260 million KWH of power from the PDB. It gradually increased to 2775.112 million KWH until December 2006. Details of purchase of electricity, collection of revenue and system loss during the period form 1991-92 to December 2006 after creation of DESA is shown below:
Despite delay, the government 10 years back, allowed private sector to produce electricity. A good number of power plants are being set up by the private sector to produce electricity in the near future. Details of these new projects to be implemented by 2010 are given below:
Traditionally, the government had the responsibility to generate and supply power. It recently took the initiative to set up a number of gas-based as well as diesel-run power plants. These plants are expected to go into production after establishment in 2010 to supply electricity to the national grid. Details of these projects are as follows:
Why Bangladesh cannot produce electricity as per demand is the common question of all. The reasons for such failure are:
The government usually takes plans for development on annual basis instead of long-term ones. It takes a year just to start the work, not to speak of completing of the project. One-year plans are not at all justified for the power sector. Long-term plans for five to 20-year is necessary for this sector. Owing to short term development plans, most of the projects are left incomplete during a government's tenure to be abandoned by the next government, which prefers to take newer projects
Power sector is no exception to corruption. Corruption has increased. Corruption has increased at the grass-roots. Tk 14.43 billion had to be paid by the service sector. A metre reader has tens of millions of Taka. The officers and staff of power sector-related departments and agencies indulge in corruption. In respect of selection of international tenders, owing to corruption, deserving bidders could not be chosen for which projects of expected standard were not established. Allegations point to national level corruption as well. Effective steps were yet to be taken to save the power sector from the vicious cycle of corruption.
To remove the vicious activities from the power sector, proper legal action is needed. Attempts to improve power sector through law failed. By establishing transparency and accountability in the power sector, misuse of tens of millions of Taka in the name of system loss could be stopped. Opportunities for such misappropriation were created by the consumers. The officers and staff were also involved in the fraudulent business.
If proper enforcement of law is not ensured and judiciary is not made effective, prevention of huge loss in the sector will never be possible.
Despite publicity for increased production and uninterrupted supply of electricity, no effective measures were taken. Before investment in these large and capital intensive projects, high officials ask for their share in advance for which the projects cannot proceed. Due to absence of transparency and accountability, production of electricity could not be increased by local or foreign investors.
Not only in the power sector, problems have been prevailing everywhere in the country. Owing to absence of initiative and planning as well as dearth of capital, many good projects could not be implemented. Power sector is not an exception.
Power sector development needs long term plan for 25 years. The plan should take an account of the demand for the next 25 years. Without long term plan, improvement of the sector is not possible.
The sector needs to be made corruption-free by ensuring transparency and accountability. Strict and effective measures have to be taken to remove corruption from the power sector by adopting strict monitoring system.
The politicians and the bureaucrats should not be allowed to indulge in corruption in this sector. Appropriate regulations should be framed to refrain them from corruption. A capable and honest person shall have to be appointed to head the project.
Over and above, to make it an efficient and priority sector, corruption has to be eradicated right from the grass-roots to the highest level. To remove corruption from the sector, people from all walks of life have to come forward. A sustained anti-corruption move alone can keep the national scourge away.
As the overall development of the country depends on this sector, the government needs to take a long term and practical plan to mobilise sufficient local and foreign investment for development of the power sector. Since the prospect of gas-based electricity appears to be bleak, gradually proper initiative has to go for the nuclear option to produce electricity in the country.
.......................................................................
The writer is chairman, Eastern University
and vice-chairman, Association of Private
Universities of Bangladesh
After the liberation, appropriate long-term plan was not taken to develop power, fuel and mineral resource sectors. Power sector is failing to meet the demand due to scattered and unwise planning. The production of electricity per head amounting to only 165 KWH is less than many other developing countries.
Of the total net production of electricity, 65.24 per cent was produced by the government sector and 34.76 per cent by the private sector, on an average, in fiscal 2006-07. On the other hand, of the total net production, 85.75 per cent production was gas-based, while 3.65 per cent was hydroelectricity, 4.80 per cent was coal-based and 5.80 per cent was oil-based. Per head production of electricity was 165KWH in 2005-2006 fiscal year. Although, the installed capacity has increased considerably, yet actual production did not increase. Due to shortage of production, actual demand could not be met over the last few years. For the period from 1995-96 to 2006 -2007, the installed capacity, production capacity (achievable) and the highest production is given below:
The system loss of Bangladesh Power Development Board (PDB) for the fiscal 2006-2007 until December 2006 was 7.25 per cent of net production. System loss for the previous financial year was 7.86 per cent. The system loss has, therefore, been reduced 0.61 per cent compared to that of last financial year. Until 2005-2006 financial year, the arrear bills of PDB receivable form different private and government organisations stood at over Tk 45 billion or equivalent to 10.95 months' bill. The system loss, arrear bills and other receivables of PDB for the financial years 1995-96 to 2006-2007 is shown below:
The Dhaka Electric Supply Authority (DESA) was created bifurcating the PDB. In order to develop and accelerate the supply of electricity in greater Dhaka including the Metropolitan area and to establish accountability, the DESA was created by an Act passed by parliament on March 06, 1990. The system loss of the DEDA was 38.20 per cent but it came down to 19.89 per cent in the financial year 2006-2007 (till December).
In the first financial year following the creation of the DESA (1991-1992), it bought 2260 million KWH of power from the PDB. It gradually increased to 2775.112 million KWH until December 2006. Details of purchase of electricity, collection of revenue and system loss during the period form 1991-92 to December 2006 after creation of DESA is shown below:
Despite delay, the government 10 years back, allowed private sector to produce electricity. A good number of power plants are being set up by the private sector to produce electricity in the near future. Details of these new projects to be implemented by 2010 are given below:
Traditionally, the government had the responsibility to generate and supply power. It recently took the initiative to set up a number of gas-based as well as diesel-run power plants. These plants are expected to go into production after establishment in 2010 to supply electricity to the national grid. Details of these projects are as follows:
Why Bangladesh cannot produce electricity as per demand is the common question of all. The reasons for such failure are:
The government usually takes plans for development on annual basis instead of long-term ones. It takes a year just to start the work, not to speak of completing of the project. One-year plans are not at all justified for the power sector. Long-term plans for five to 20-year is necessary for this sector. Owing to short term development plans, most of the projects are left incomplete during a government's tenure to be abandoned by the next government, which prefers to take newer projects
Power sector is no exception to corruption. Corruption has increased. Corruption has increased at the grass-roots. Tk 14.43 billion had to be paid by the service sector. A metre reader has tens of millions of Taka. The officers and staff of power sector-related departments and agencies indulge in corruption. In respect of selection of international tenders, owing to corruption, deserving bidders could not be chosen for which projects of expected standard were not established. Allegations point to national level corruption as well. Effective steps were yet to be taken to save the power sector from the vicious cycle of corruption.
To remove the vicious activities from the power sector, proper legal action is needed. Attempts to improve power sector through law failed. By establishing transparency and accountability in the power sector, misuse of tens of millions of Taka in the name of system loss could be stopped. Opportunities for such misappropriation were created by the consumers. The officers and staff were also involved in the fraudulent business.
If proper enforcement of law is not ensured and judiciary is not made effective, prevention of huge loss in the sector will never be possible.
Despite publicity for increased production and uninterrupted supply of electricity, no effective measures were taken. Before investment in these large and capital intensive projects, high officials ask for their share in advance for which the projects cannot proceed. Due to absence of transparency and accountability, production of electricity could not be increased by local or foreign investors.
Not only in the power sector, problems have been prevailing everywhere in the country. Owing to absence of initiative and planning as well as dearth of capital, many good projects could not be implemented. Power sector is not an exception.
Power sector development needs long term plan for 25 years. The plan should take an account of the demand for the next 25 years. Without long term plan, improvement of the sector is not possible.
The sector needs to be made corruption-free by ensuring transparency and accountability. Strict and effective measures have to be taken to remove corruption from the power sector by adopting strict monitoring system.
The politicians and the bureaucrats should not be allowed to indulge in corruption in this sector. Appropriate regulations should be framed to refrain them from corruption. A capable and honest person shall have to be appointed to head the project.
Over and above, to make it an efficient and priority sector, corruption has to be eradicated right from the grass-roots to the highest level. To remove corruption from the sector, people from all walks of life have to come forward. A sustained anti-corruption move alone can keep the national scourge away.
As the overall development of the country depends on this sector, the government needs to take a long term and practical plan to mobilise sufficient local and foreign investment for development of the power sector. Since the prospect of gas-based electricity appears to be bleak, gradually proper initiative has to go for the nuclear option to produce electricity in the country.
.......................................................................
The writer is chairman, Eastern University
and vice-chairman, Association of Private
Universities of Bangladesh