Although Bangladesh has revised retail fuel prices and power tariff frequently this fiscal year, the government would have to shell out more than Tk. 20,000 crore, which is highest so far, as fuel subsidy.
According to a source at Bangladesh Power Development Board (BPDB), fuel consumption is expected to cross seven million tonnes this year, up from an average three million tonnes in the previous decade. Last year, the country imported 4.8 million tonnes at a cost of Tk. 29,000 crore, which is expected to cross Tk. 49,000 crore this year. According to the central bank’s letter of credit (LC) settlement statistics, import of petroleum surged 135 per cent in the July-September quarter, this fiscal year, compared with the same period last year.
Bangladesh Petroleum Corporation (BPC) chairman, Muktadir Ali, told The Independent that the main reason for soaring oil consumption was the introduction of privately held fuel-based quick-rental power plants, as well as a rise in captive power plants at factories.
“If we don’t increase prices, and if international fuel price remains at the level it is now, our oil subsidy bill in the 2011-12 financial year will rise to more than Tk. 20,000 crore,” Muktadir Ali said.
Bangladesh’s demand for power used to be met by gas, extracted from local fields. But gas supply has failed to meet the rising demand for electricity, leading to chronic power shortages and rolling blackouts.
In the current fiscal year, the government will have to import 68.9 lakh tonnes of petroleum, of which 21.50 lakh ton will be consumed by the power plants, as estimated by the finance division.
Power generation by such plants started last year. Before that, Bangladesh used to import 32-35 lakh ton of fuel every year.
Till May this year, the government permitted private companies to install 24 power plants with a total generation capacity of 2,770 megawatts.
Of them, 14 have already started production, and 10 are being established. After May, the government permitted some more privately-owned power plants.
Initially, the project tenure was for three to five years, but for some projects, the lifeline is about 15 years, which, according to economists, is not judicious at all.
Mustafa K Mujeri, director general of BIDS, noted that setting up of rental power plants was a stop-gap measure. “Although they were not appropriate for us, we did not have any other option to save the country from power crisis,” he said.
The government should be aware that the oil import bill would go up due to the rental power plants, Mujeri said. “But we did not do much homework on the issue. It is a failure on the part of the government,” he added.
Zahid Hassan, a senior economist of the World Bank, said that Bangladesh has to solve its problem for primary energy. There was a period when power would go off every two hours, which should come to an end, he added.
-With The Independent input
