Power shortage frustrates investments
Shaqeel Quasem | Thursday, 17 July 2008
ECONOMIC growth is the best assurance -- notwithstanding variables like how much the growth is pro-poor or if distributive justice is attained --for a continuous process of job creation, lifting up living standards and alleviating poverty. This growth in turn depends upon a host of factors such as mobilisation of funds for investments, the cost of funds, state of law and order, infrastructures, fiscal and monetary policies of the government, etc.
But in the Bangladesh context, the main constraint now appears to be the availability of energy-- especially electrical energy-- to help enterprises to attempt expansion or for the new entrepreneurs to come forward out of a confident feeling that they would be reliably provided with adequate power to run their planned enterprises.
Inadequate power supply compared to need is the biggest logjam in the path of investment operations and economic growth in Bangladesh. Speakers at a recent seminar in the capital city of Dhaka have very appropriately and significantly underlined that although energy is not an explicit target of the Millennium Development Goals (MDGs) sponsored by the United Nations (UN), it would not be possible to even come near the attainment of the goals in the context of Bangladesh if access to energy, especially power, continues to be so difficult. Indeed, not only the MDGs in Bangladesh context would suffer, the highly desired accelerated economic growth of the country would continue to be frustrated, if the energy supply, particularly power supply, is not substantially augmented.
Per capita power generation in Bangladesh remains at one of the world's lowest levels. Only a third of the country's population has access to electricity, and even they have a poor, unreliable service plagued by frequent power outages and low voltage. This stems from inadequate power generation capacity and poor transmission and distribution systems. The conditions have hardly changed during the last couple of years.
Most of the industrial manufacturers have to rely on costly generators, and small enterprises that cannot afford backups have no alternative but to shut down during prolonged power outages. Over the last decade, net energy demand in the country has grown by 8.1 per cent a year. Yet for the much-desired average annual GDP growth rate of 8 per cent over the next two decades for alleviating poverty, the needed average annual energy growth rate is 12 per cent. But there has been practically zero, if not negative, growth in new power generation capacities in recent years. Thus, the country faces a truly challenging task of meeting this rising energy demand, which will need substantial investments. Nearly $ 16 billion would be required to ensure reasonably sufficient availability of power to all categories of users by 2020.
A roadmap for the power sector was unveiled not in the distant past by the government, showing an order of priorities to be achieved over the short, medium and long terms to add to power generation capacities. However, the progress relating to implementation of the programmes under the roadmap has so far been minimum. There is no alternative to following this roadmap for raising the country's power generation capacity in both public and private sectors, if it is to achieve its cherished growth rate, by attracting new investments and facilitating the capacity utilisation of existing enterprises. The government should, first of all, take effective measures to streamline fund mobilisation for different power generation projects and also get most of these projects concretised. The next elected governments should, thus, face no problems in carrying them forward. Major donor organisations have been reported to have expressed their willingness to provide assistance for the power sector. Such offers need to be acted upon quickly. The government may also float bonds to raise resources for developmental activities in the power sector. The same would very probably fetch an enthusiastic response from local people and the Bangladeshi-born investors from abroad.
But in the Bangladesh context, the main constraint now appears to be the availability of energy-- especially electrical energy-- to help enterprises to attempt expansion or for the new entrepreneurs to come forward out of a confident feeling that they would be reliably provided with adequate power to run their planned enterprises.
Inadequate power supply compared to need is the biggest logjam in the path of investment operations and economic growth in Bangladesh. Speakers at a recent seminar in the capital city of Dhaka have very appropriately and significantly underlined that although energy is not an explicit target of the Millennium Development Goals (MDGs) sponsored by the United Nations (UN), it would not be possible to even come near the attainment of the goals in the context of Bangladesh if access to energy, especially power, continues to be so difficult. Indeed, not only the MDGs in Bangladesh context would suffer, the highly desired accelerated economic growth of the country would continue to be frustrated, if the energy supply, particularly power supply, is not substantially augmented.
Per capita power generation in Bangladesh remains at one of the world's lowest levels. Only a third of the country's population has access to electricity, and even they have a poor, unreliable service plagued by frequent power outages and low voltage. This stems from inadequate power generation capacity and poor transmission and distribution systems. The conditions have hardly changed during the last couple of years.
Most of the industrial manufacturers have to rely on costly generators, and small enterprises that cannot afford backups have no alternative but to shut down during prolonged power outages. Over the last decade, net energy demand in the country has grown by 8.1 per cent a year. Yet for the much-desired average annual GDP growth rate of 8 per cent over the next two decades for alleviating poverty, the needed average annual energy growth rate is 12 per cent. But there has been practically zero, if not negative, growth in new power generation capacities in recent years. Thus, the country faces a truly challenging task of meeting this rising energy demand, which will need substantial investments. Nearly $ 16 billion would be required to ensure reasonably sufficient availability of power to all categories of users by 2020.
A roadmap for the power sector was unveiled not in the distant past by the government, showing an order of priorities to be achieved over the short, medium and long terms to add to power generation capacities. However, the progress relating to implementation of the programmes under the roadmap has so far been minimum. There is no alternative to following this roadmap for raising the country's power generation capacity in both public and private sectors, if it is to achieve its cherished growth rate, by attracting new investments and facilitating the capacity utilisation of existing enterprises. The government should, first of all, take effective measures to streamline fund mobilisation for different power generation projects and also get most of these projects concretised. The next elected governments should, thus, face no problems in carrying them forward. Major donor organisations have been reported to have expressed their willingness to provide assistance for the power sector. Such offers need to be acted upon quickly. The government may also float bonds to raise resources for developmental activities in the power sector. The same would very probably fetch an enthusiastic response from local people and the Bangladeshi-born investors from abroad.