New master plan ambitious, flawed

The Centre for Policy Dialogue (CPD) has called on the government to revise the proposed Integrated Energy and Power Master Plan (IEPMP), describing it as ambitious and flawed. 

CPD Research Director Khondaker Golam Moazzem said this at a press conference in the capital on Thursday.

The think tank also raised questions about the move to increase retail power prices despite seeking subsidies of Tk 56,000 crore.

In the IEPMP, the government has set a target to generate 90,000MW electricity by 2050.

The CPD demanded the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010 be abolished. It also said the expensive rental and quick rental plans should be phased out.

Moazzem said, “The agreement to purchase power from oil-fired independent power producers should be revised. The authorities should also go for a ‘no electricity, no pay’ system for power plants.”

“Moreover, subsidies in the power and energy sectors should be removed,” he added.

The IEPMP is the first of its kind in the country. Japan International Cooperation Agency is providing technical support for the plan funded by the Japanese government.

The plan is expected to be finalised in March next year. The government expects this plan will lead to integrated development in the energy and power sectors.

However, the CPD said its assessment revealed no major changes in the new plan compared to the previous ones. It said some initiatives in the plan are good, such as using solar power for irrigation and setting up solar panels on school rooftops.

Ambitious plan

The CPD said the country can now generate 22,500MW but only 40 per cent of this capacity is used while the remaining 60 per cent sits idle even though capacity payment has to be made.

Consumers have to bear the burden of the additional cost, including capacity payment, which has increased their suffering amid high inflation, it said.

The new master plan envisages 90,000MW power generation by 2050, forecasting growth in gross domestic product (GDP) per capita. The CPD said per capita GDP should be $12,500 to become a developed country, which is now only $2,700.

“To increase it to this level is not possible in the next 28 years. As a result, even if the government achieves the power generation target, huge capacity will sit idle, which will put the cost burden on consumers,” the research organisation said.

Expense reduction

The CPD said the power sector has huge subsidy pressure due to oil-based power plants and liquefied natural gas (LNG) imports. At the same time, gas, electricity, and fuel prices are increasing, which is aggravating people’s suffering.

CPD Executive Director Fahmida Khatun said the fuel price hike has become a big burden on consumers amid high inflation while it is possible to save a lot of money by ensuring good governance in the energy sector.

She said, “Many, both inside and outside the country, have interests in the energy sector. But the master plan should be prepared considering the interests of the people and the country, and not that of the other parties.”

Fuel must be ensured for all at affordable prices, she added.

The government plans to stop diesel-based power generation from next year, but nothing concrete has been said about the rental and quick rental power plants in the master plan, said the CPD. 

It said if these expensive plants are phased out and costs are reduced, the subsidy pressure will go down. It also demanded a revision of the agreement of purchasing power from furnace oil-based independent power producers.

“It is possible to reduce subsidies with a five-year plan by implementing the various measures announced by the government in the energy sector. This will save about $16 billion in three years. But for this, the same amount of money has to be invested,” the CPD noted.

Coal-based plants

As part of the IEPMP, power generation will be increased from coal-fired plants depending on domestic coal, which the CPD considers too risky.

There is also the target to use 7,500MMcf/d gas by 2050 to generate electricity. Big infrastructure is being built for this in the southern part of the country.

The CPD said importing huge amount of LNG will require big investment, which will hamper domestic gas exploration. Besides, higher LNG prices will create a lot of subsidy pressure in the power sector.

Coal consumption is decreasing globally and Bangladesh should also get out of it, it said.

Renewable energy neglected

Prime Minister Sheikh Hasina said at the COP26 summit in Glasgow that Bangladesh will produce 40 per cent of its electricity from renewable energy by 2041.

But the new master plan specifies up to 40 per cent generation from renewable energy by 2041, which is contradictory, the CPD said. 

Moazzem said renewable energy is getting priority among Bangladesh’s competitors, including Sri Lanka, Vietnam, Thailand, and Japan.

“If expensive power plants are phased out, businessmen will be interested in investing in renewable energy. At the same time, banks will be keen to increase investment in this area.”

The CPD said the new plan mentions clean energy instead of renewables, which is more controversial because it will be produced using decarbonisation technology in coal-based plants.

Besides, this will encourage the establishment of coal-based power plants in future, it said.

Subsidy questioned

The Ministry of Power, Energy and Mineral Resources recently asked for a subsidy of Tk 56,000 crore in the power and energy sectors.

The CPD said its assessment shows a subsidy of Tk 33,000 crore should be enough.

“It is not clear where such a huge amount of subsidy is going. It is not understandable why initiatives are being taken to increase electricity prices even after the subsidy,” it said. 

The Bangladesh Petroleum Corporation is currently earning Tk 29 from per litre diesel, the CPD said. “Despite that, a subsidy of Tk 19,000 crore has been sought for the company, which is not acceptable.”