Power supply and MDGs
Friday, 21 September 2007
ECONOMIC growth is the best assurance -- notwithstanding variables like how much the growth is pro-poor or to what extent distributive justice has been attained -- for a continuous process of job creation, lifting 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 biggest immediate constraint appears to be the availability of energy, specially 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 contemplated enterprises.
But inadequate power supply compared to need is the biggest logjam in the path of investment operations and economic growth in Bangladesh. A seminar was held recently under the joint initiative of the United Nations Development Programme (UNDP) and the Power Division of the Ministry of Power. Speakers in it very appropriately and significantly have underlined that although energy is not an explicit target of the development-oriented 'millennium development goals' (MDGs) sponsored by the United Nations (UN), it will not be possible to even come near the attainment of these goals in the context of Bangladesh if access to energy, specially power, continues to be so difficult. Indeed, not only the MDGs in respect of Bangladesh would suffer but also the highly desired accelerated economic growth of the country would continue to be frustrated badly if the energy supply, particularly power supply, is not substantially augmented.
Per capita power generation in Bangladesh is only about 158 kilowatt-hours a year, among the world's lowest. Only a third of the population has access to electricity, and even they have a poor, unreliable service suffering from frequent power outages and low voltage. This stems from inadequate power generation capacity and poor transmission and distribution systems. In FY2006, the maximum served generation was only 3,812 megawatts (MW) as against peak demand for 4,693 MW, resulting in up to 1,312 MW load shedding on 347 days. Most 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 has grown by 8.1% a year. Yet for an expected average annual GDP growth rate of 8.0% over the next two decades, the needed average annual energy growth rate is 12%. But there has been practically zero growth in new power generation capacities in recent years. Thus, the country faces a truly challenging task of meeting this burgeoning 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 recently which shows an order of priorities to be achieved over the short, medium and long terms to add to generation capacities. This roadmap will have to be unfailingly followed specially during the tenure of the present caretaker government which has created the plan in the first place and seems to be giving it high priority. This government should at least streamline fund mobilisation for different power generation projects and also get most of these projects concretised so that successor governments face no problems in carrying them forward or feel only obligated to do so. Major donor organisations have pledged large scale assistance for the power sector and these offers need to be utilised quickly. 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 Bangladeshi investors abroad.
But inadequate power supply compared to need is the biggest logjam in the path of investment operations and economic growth in Bangladesh. A seminar was held recently under the joint initiative of the United Nations Development Programme (UNDP) and the Power Division of the Ministry of Power. Speakers in it very appropriately and significantly have underlined that although energy is not an explicit target of the development-oriented 'millennium development goals' (MDGs) sponsored by the United Nations (UN), it will not be possible to even come near the attainment of these goals in the context of Bangladesh if access to energy, specially power, continues to be so difficult. Indeed, not only the MDGs in respect of Bangladesh would suffer but also the highly desired accelerated economic growth of the country would continue to be frustrated badly if the energy supply, particularly power supply, is not substantially augmented.
Per capita power generation in Bangladesh is only about 158 kilowatt-hours a year, among the world's lowest. Only a third of the population has access to electricity, and even they have a poor, unreliable service suffering from frequent power outages and low voltage. This stems from inadequate power generation capacity and poor transmission and distribution systems. In FY2006, the maximum served generation was only 3,812 megawatts (MW) as against peak demand for 4,693 MW, resulting in up to 1,312 MW load shedding on 347 days. Most 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 has grown by 8.1% a year. Yet for an expected average annual GDP growth rate of 8.0% over the next two decades, the needed average annual energy growth rate is 12%. But there has been practically zero growth in new power generation capacities in recent years. Thus, the country faces a truly challenging task of meeting this burgeoning 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 recently which shows an order of priorities to be achieved over the short, medium and long terms to add to generation capacities. This roadmap will have to be unfailingly followed specially during the tenure of the present caretaker government which has created the plan in the first place and seems to be giving it high priority. This government should at least streamline fund mobilisation for different power generation projects and also get most of these projects concretised so that successor governments face no problems in carrying them forward or feel only obligated to do so. Major donor organisations have pledged large scale assistance for the power sector and these offers need to be utilised quickly. 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 Bangladeshi investors abroad.