The way Bangladesh is going, load shedding will continue in the coming days as the government is moving towards more LNG-based power generation, which in turn would increase imports costs, said the Centre for Policy Dialogue (CPD).
At present, Bangladesh requires $10 billion to import fuel annually, and by 2030, the figure will exceed $20 billion. If this continues, there is a danger that the energy and power sector will become a white elephant, the think tank says.
Renewable energy is still being neglected, although there is a huge investment opportunity. CDP made the remarks at a discussion on power and energy challenges in the budget for FY24, held at a city hotel in Dhaka on Thursday.
Bangladesh currently provides 38 per cent subsidy to the power sector, which is the highest in the entire continent of Asia. However, energy and power prices in the country are also high compared to other Asian nations.
This burden of expenditure – shouldered by the people of Bangladesh – is increasing steadily due to corruption, non-transparent capacity payments to private power plants, and large energy import costs, said the Center for Policy Dialogue (CPD).
This persistent crisis is being managed by hiking prices, which in turn is being justified by showing huge subsidies on one side, and losses on the other, CDP added.
At the discussion, energy experts M Shamsul Alam, Badrul Imam and Ijaz Hossain strongly criticized the government and administration's inefficiency, mismanagement, and step-by-step cost increase in the energy and power sector.
According to the CPD, the government is not learning from the ongoing power and energy crisis. We see a strategy of more reliance on imported LNG in the power sector. But it is necessary to move away from this practice.
CDP says the additional allocation for the energy sector is a major challenge going forward.
Prof Alam said, “The government is happier with the big budget, we [the consumers] are more worried about it because the people will have to bear the costs. The people are now struggling to survive due to high inflation, but the burden of expenditure increased in the budget.”
“Bangladesh has become a market for LNG, coal and other petroleum products, including Adani's electricity and cross-border transmission lines.”
He added, “Consumers are now paying extra. A big budget is being made with that money, but there is little for the consumers. There should be research to determine how much money has been laundered in the name of power and energy sector development.”
CPD Research Director Khondaker Golam Moazzem presented a research paper on the energy and power sector in the new national budget. He showed that in just seven years, the financial loss of Bangladesh Power Development Board (BPDB) rose from Tk 5376 crore to Tk 28,000 crore.
At the same time, subsidy pressure in the power sector increased from 24 per cent to 38 per cent, the highest in Asia.
CPD says capacity charges of private power plants are one of the major causes of BPDB's losses. In FY21, the BPDB spent Tk 13,200 crore on capacity charges. The figure increased to Tk 24,000 crore in FY22.
In FY23, the capacity payments may hit TK 28,000. It will continue to increase as power generation capacity increases. By 2025, the excess power generation capacity will hit 46 per cent.
CPD said the Bangladesh Petroleum Corporation (BPC) is making large profits from the latest fuel price hike. If the government goes for a market-based pricing system, the burden on consumers will continue to increase.
The CPD claims that the financial reporting of BPC, BPDP and Petrobangla lack transparency.
CPD's research showed that allocation for the power sector has been increased by 28 per cent in this year's budget and 93 per cent of the additional allocation has been earmarked for power generation.
Only five of the 96 projects in the budget are renewable energy. The finance minister had previously mentioned that 23,000MW of new electricity is being added in the near future. What to do with this additional electricity is the cause of concern.
Geologist Badrul Imam said, “The main source of energy in the country is gas. The current crisis would not have occurred if gas exploration had continued. Gas exploration is being neglected. Such negligence must be punished.
“In fact, such a gas crisis has been created deliberately. Under such circumstances, LNG imports will continue to increase.”
Ijaz Hossain, a retired professor of BUET, said, “The problem is in the energy sector, and budget allocation is increasing in the power sector. Last year, due to the crisis, the government had decided to increase gas exploration.
“The prices of coal, LNG and fuel oil have now decreased in the global market. So the government is leaning towards imports again. One power plant after another has been built without an energy guarantee.”
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Senior Vice President Mustafa Azad Chowdhury said, “Industrialisation has increased since Awami League came to power, and was able to provide electricity quickly.
“Now the situation is grim for traders. The industries are suffering severely due to disruptions in the electricity supply.”
