The Awami League-led Grand Alliance government, at first glance, seems to have obtained full marks in addressing the country’s power crisis within a short time. But is the picture actually that rosy? First, the successes. It is a fact that in 2009, the government had faced a shortfall of 2,500 MW of electricity and 800 mmcf of gas per day. It had set a benchmark in the country’s history of power generation by adding 3,000 MW of electricity and around 600 mmcf of gas to the national grid. But if the energy growth demand and derated capacity of plants are taken into account, then this amount is not satisfactory.
Again, in the last four years the government has signed 58 contracts to implement 60 plants with a capacity of 8,130 MW of electricity. However, it has added only 5,400 MW (it has added around 2,751 MW of electricity from its own account while the other capacity was in the pipeline.)
The reality is that the country will face serious setbacks because of the shortage of funds and fuel, which will have a cascading effect on tariff structures not only now but in the future as well, experts observed.
At this juncture it can be said that the government has failed to address the energy issue though it had made a very clear-cut statement in its election manifesto about ensuring energy supply in the country, M. Tamim, a former adviser and a Bangladesh University of Engineering and Technology (BUET) professor told The Independent.
“The government has successfully managed the day-to-day demand-supply chain within ‘tolerable’ levels in the last four years, given its limited efforts and scope. But if we look into the issue in a proper manner, we will find some questions to which the government is yet to reply. These questions are crucial for the energy sector and the country’s sustainable economic growth,” he said.
The average power generation cost has more than doubled — from Tk. 2.59 a kilowatt-hour (unit) to Tk. 5.57 a unit — for the increase in power generation of 47 per cent in the last four years, according to the Bangladesh Energy Regulatory Commission (BERC).
It also said that the subsidy in power generation has increased more than four times — from Tk. 900 crore to Tk. 3,850 crore — during the tenure of the present government.
According to economist Anu Mohammad, the hike in the price of electricity time and again is not acceptable when the government provides huge amounts of subsidies from the public coffers.
“Influential members of the ruling party, who had also set up plants, have mostly benefited from the hike in price of electricity and the subsidies,” the economist stated.
Anu Muhammad alleged that there was massive corruption in the purchase of power from the quick rental power plants.
Prof. Izaj Hossain of BUET said the failure of the government to make progress with the big power plants, funded by the public, is cause for suspicion. “The ruling party has given less priority to installation of big power plants so as to continue purchases of electricity from the quick rental plants. But the reality is that it will make the power sector non-sustainable in the near future,” he said.
“The government was desperate to add power to prevent power cuts, which used to last from 12 to 18 hours. It completed the task on a war footing but failed to look into the basic issues, such as the need to ensure fuel supply and funds for future investment and minimise the cost of power production, all of which have a major impact on tariffs,” Hossain said.
For the last two years, fuel and funds crises have crippled the power sector. As a result, the tariff has increased seven times in the last four years.
However, if the scenario in the power sector is grim, the energy sector is in a total mess.
The 23 gas fields of the country had produced 10.51 tcf gas till June this year against the total reserves of 26.88 tcf. Gas reserves can be used for the next 19 years if the resource is consumed at the present rate of 2.26 billion cubic feet per day. But the gas reserves will be available for 14 years if it is used at a rate of 3.04 bcf per day.
What will happen after 14 or 19 years? What will be the fate of the government’s plan to take the country’s economic growth into double digits?
Former Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president AK Azad recently said that around Tk. 35,000 crore worth of investments are now frozen as the government has failed to supply energy.
Again, in such circumstances, the government has created serious confusion by allowing two different wings to produce different reports on energy reserves and resources. Recently, Petrobangla and Hydrocarbons Unit, two wings of the energy ministry, have published differing reports on the country’s gas reserves.
According to Petrobangla’s report, the country’s total gas reserves (recoverable) amount to 16.37tcf in all the 23 fields currently in operation in the country. But the Hydrocarbons Unit has estimated the country’s gas reserves at 18.2tcf. Not only that, Petrobangla, the state-run oil and gas production company, told the nation that it would be able to get structures of huge size at Sunetro and at least four structures in different parts of the country. Unfortunately, this information was wrong.
The Power Division has conceded that this allegation was valid. It said that as a result of the wrong database, they are now facing serious problems. “On knowing about the availability of energy, we planned to install a 1,325-MW gas and dual fuel-based combined cycle peaking plant by 2015 on a BOO basis. But the plans are now in jeopardy as Petrobangla has said that it is not possible for it to supply gas for these power plants.”
According to the commerce and industry ministry, it is a precondition for an investor to obtain a no-objection certificate from the local gas distribution company in order to operate its business. Investors have obtained NOCs, but ultimately they have heard that there was no gas.
Again, the government is yet to take any decision on the coal sector. Although the adviser to the Prime Minister, Dr Tawfiq-e-Elahi Chowdhury, said here on Thursday that the government did not award the contract to Asia Energy to extract coal from Phulbari through the open-pit mining method, it did not tell Asia Energy anything or take any measures to award the valuable coalfield to anyone else.
It seems that even a two-thirds majority in Parliament is not enough to empower the government to take decisions on the coal sector. The crisis is deepening against the backdrop of dwindling disbursement of project aid by the country’s multilateral development partners.
According to estimates by the power ministry, the expected requirement of funds for the generation, transmission and distribution sectors stand at around USD 18 billion, USD 2 billion and USD 4 billion respectively. The energy sector needs around USD 8 billion to implement its ongoing projects.
Under this situation, it has been said that the donors’ stand has hampered the government’s plans to add 1,300 MW (in IPP (independent power producer projects) as the World Bank has refused to offer performance risk guarantee (PRG) for three IPP projects. The Power Development Board (PDB) has failed to install 1,100-MW capacity coal-based power stations due to a funds crunch.
-With The Independent input
