Revive regulator, rescind legal indemnity for fair energy pricing

Revive regulator's tariff-adjustment authority to ensure fair pricing of power and petroleum products for Bangladesh's sustainable growth, an all-stakeholder meet recommends as an industrialist narrates business woes for high energy and fund costs.
In this context, the speakers also demanded abolishing the special law in power and energy sector to ensure competitive tariffs from sponsors of both fossil-fuel and renewable-energy- based power plants.
The government enacted the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 with a provision of indemnity fourteen years back and extended over and again with validity until 2026 under the latest extension.
The Centre for Policy Dialogue (CPD) organised the dialogue styled 'Power and Energy Sector in the National Budget FY2025: Challenges and Proposed Measures' at a hotel here Sunday.

Member of Parliament and leading business entrepreneur A K Azad was special guest at the event, while Director-General of Power Cell Mohammad Hossain guest of honour. Executive director of the CPD Fahmida Khatun chaired the meet and CPD research director Khondaker Golam Moazzem delivered the keynote presentation.
Narrating business woes in the current context, newly elected lawmaker Ak Azad said many industries were shutting down operations as their losses were mounting due to soaring power and energy tariffs.
And bank interest rates have also gone up to 14 per cent from 9.0 per cent to inflate business costs, he told the meet that came up with pleas for possible budgetary remedies.
"Many industry owners are bound to run their factories with expensive diesel for seven to eight hours for insufficient electricity and natural gas," Mr Azad said.
He was also critical of government's growing dependence on imported liquefied natural gas (LNG) to meet natural-gas demand, at this time when the economy suffers for shortage of foreign-currency reserves.
"Do we have the affordability to depend entirely on LNG when local gas will be exhausted by 2030?" the independent MP questioned.
Mr Azad was also critical of a recent government move to purchase some 261 sport utility vehicles (SUVs) for local administrative officers when the country was in an austerity ordeal.
He alleged that many bureaucrats are plying streets with government vehicles in front and back of their cars as protocols. He feels that to attract foreign direct investment, there is no alternative to ensuring power and energy at affordable costs.
Special law in power and energy sector is inflating government's power-purchase costs from solar power plants, said energy-expert Prof M Tamim about fuel-pricing paradoxes.
Purchasing costs should have been around US7.0 cents instead of US10 cents, he added. "Ensuring power and energy at affordable price is a major challenge," he noted.
Energy adviser of the Consumers Association of Bangladesh (CAB) professor Shamsul Alam alleged that the automated fuel-pricing formula is fuelling up 'automated corruption' in this sector.
"The government has amended the Bangladesh Energy Regulatory Commission (BERC) law to snatch the responsibility of fixing power and energy prices to itself, is encouraging corruption," he said.
Professor Alam said development doesn't mean continuous hike in power and energy tariffs and growing deficits.
Senior journalist Mollah Amzad said extending tenure of old power plants under 'no-electricity, no-payment' mechanism is going to be a new fiscal trap for the government as their operation and maintenance costs of such plants are very high. The CPD has demanded reviewing the power demand as it has estimated that the country's electricity demand to reach about 19,377 megawatts by 2030 instead of an inflated government projection of 40,000 MWs.
"Considering a 25-percent reserve margin, the projected demand would be 23,252 MWs, which is lower than the current installed capacity of 30,738 MWs," the CPD study reveals.
The think-tank was also skeptical whether the government would be able to drill gas wells as planned.
"Although the government had a plan to drill 46 gas wells by December 2024, only eight gas wells were explored so far," it notes about the delays.
The budget for the power and energy sector fails to comply with required allocation for energy sustainability and energy transition in the country, the CPD points out, suggesting that the budget for the sector should be structured from energy-sustainability and energy-transition point of view.
The budget should reaffirm government commitment to phasing out of the old, outdated, expensive fuel-based plants ending contractual periods, the CPD recommends.
Also, it says, the budget needs to extend tax holidays from five years to 10 years for renewable power plants.
"The target of drilling 48 wells by 2025 will not be possible to attain unless the priority is shifted from LNG import to domestic gas exploration," it says.
The policy think-tank alerts that eelying heavily on imported LNG could make Bangladesh more vulnerable to changes in global prices and political issues between countries.
[email protected]