Home ›› 09 Dec 2022 ›› Back

Energy sector’s privatisation will be catastrophic


09 Dec 2022 00:00:00 | Update: 09 Dec 2022 00:03:16
Energy sector’s privatisation will be catastrophic

The government plans to import oil and gas through the private sector soon and the Ministry of Power, Energy and Mineral Resources is working on a policy for that. But it will be disastrous for the energy market because the private sector will create a monopoly and hike fuel prices frequently in future. This will destroy economy management, said energy expert Professor M Shamsul Alam during an interview with The Business Post’s Ashraful Islam Raana. Shamsul, a retired professor at Chittagong University of Engineering and Technology, currently serves as the dean of engineering faculty at Daffodil International University and the senior vice president of the Consumers Association of Bangladesh

What’s good or bad about the private sector importing oil and gas?

M Shamsul Alam: The spirit of our constitution is whatever the state does it will ultimately ensure the welfare of the people. Apart from fuel oil and natural gas, the government’s gradual privatisation policy in most of the sectors since the 1990s is against the spirit of the constitution.

Traders are being allowed to import oil and gas and it’s turning the service sector into a commercial sector. There is no benefit; instead, the whole thing will be against the public interest.

Why fuel is not a commercial good?

You have to understand that energy is one commodity that is more important than food security. If you ensure energy security, you will be able to ensure food security.

So there is a debate on whether energy should be seen as a business sector or as a revenue-generating sector for the government. But if the energy sector is privatised, it would be disastrous.

There are many examples before us of how horrible things can be. The traders’ actions already taken regarding imported products — sugar, edible oil, onions, etc. — have proved that the government does not have the slightest authority in the market. Even the judiciary orders are failing to control the market.

Traders are arbitrarily looting by raising prices unreasonably. Handing over the most strategic goods like fuel and gas to the unethical private sector there will put us in big trouble.

At present, some four/five companies hold the edible oil business hostage. In future, the energy sector will also be held hostage by two/four companies. But fuel is not edible oil. So its impact will hit every part of people’s life deeply.

What is the benefit of the government?

It’s alleged that the government’s power and energy companies, including Bangladesh Petroleum Corporation (BPC), played a major role in hiking prices unreasonably but it will be higher when the matter goes into the traders’ hands.

Businessmen will enter a desperate race to increase profits and the government will accept all of their unfair demands to collect more revenue because the government is facing a liquidity shortage.

Will the government only see to the businessmen’s interests?

During the BERC’s public hearing on electricity prices this year, we learned that furnace oil is used mostly to generate power. Power plant owners import about 90 per cent of the total.

If imported through BPC, it will take Tk 18 less per litre. That means 20 per cent more is being spent to import through private companies and with that, power traders are taking Tk 10,000 crore annually.

If they monopolise the oil market and increase the prices, it is impossible to imagine the impact. In this case, the ministry will not take any initiative, because it plays a supporting role to the traders.

For example, it has been seen that the government has promoted the LPG business by making policies. The High Court has established BERC’s authority over LPG business. Still, LPG traders are not complying with the price fixed by BERC and the government is not taking any action.

Did government decide this due to pressure from IMF and businesses?

It cannot be said that it has been done under the pressure of the IMF. This initiative is a continuation of privatisation that started in the country back in the 1990s, which has always impacted all commodity prices.

The IMF has asked to remove subsidies from the power and energy sectors. We also want unnecessary and predatory spending reduced. But the government is reducing spending through 18 per cent load shedding and cutting LNG imports.

Meanwhile, it has increased the prices again. But we have shown several times that it’s possible to save Tk 30,000 crore annually in the power sector and Tk 18,000 crore in the gas sector without going for load shedding and reducing LNG imports if unnecessary expenditure and corruption go down.

Is any country importing oil and gas via the private sector? If so, what is the situation there?

The auto price adjustment system for fuel oil is in place worldwide. But that is not the point. The government’s good governance and authority over the market must be considered.

For example, private corporations had control over major portions of Germany’s energy sector. But their government strictly controls the market. People’s interest is the main thing there.

Since that’s not the case in Bangladesh, the examples of all countries will not apply here.

It’s alleged that there is less initiative in domestic oil and gas exploration due to the LPG traders’ interest. If traders now get the opportunity to import oil and gas, will this problem get bigger?

This allegation is very serious and has a factual basis. Our gas production has decreased. This would not have happened if there was an opportunity to export gas. Since that’s not happening, the opportunity to import gas has been created at the government level.

Now, traders are allowed to import oil and gas, the country’s oil and gas exploration activities will no doubt become slower because they will undertake more profitable businesses like oil and LNG-fired power plants.

Will the privatisation initiative make BPC ineffective?

We are unhappy with BPC because it does not protect consumers’ rights. There are also allegations of corruption and non-transparency against BPC. However, BPC is a public institution. It has to consider the public interest to some extent because they have a responsibility.

That’s why BPC has been selling fuel oil at a regulated price across the country. But the businessmen are not accountable to the people. They will want to take over the BPC’s market completely to make more profit.

The government recently amended the BERC Act and given the authority to hike tariffs to the energy ministry as well. Will this benefit the traders in future?

We have seen that businessmen force the government to take steps to protect their interests, by going against public interests. There is no doubt the amended law will keep protecting the energy traders’ interests in the near future.

×