Govt must stand back on costly rental power, save public money

Published: 00:00, Jun 07,2020


THE worrying dominance of the power sector — which is mired in a lopsided development with more focus on the generation but without an equal focus on the transmission and distribution that has pushed up power costs, added to spending on power and burdened citizens financially without valid reasons — may continue in the national budget for the 2021 financial year because of expensive rental power plants. About a third of the subsidy and incentive, which comes to an estimated Tk 180 billion, planned for the new financial year would be set aside, as finance officials say, for the generation of electricity and the import of liquefied natural gas. While a half of the amount is said to be spent on electricity generation, the other half would be spent on liquefied natural gas import; yet, about fourth-fifths of the subsidy set aside for power generation would go to rental power plants in the form of capacity payment, which is paid for the power that is not produced to the private plants that sit idle as the demand for power is lower than the production capacity. Bangladesh has an installed power generation capacity of 20,000MW, with the demand reaching up to 12,900MW in the summer and falling down to 6,000MW in the winter.

The government has allowed the establishment of more than two dozen rental and quick rental power plants since 2009. The move initially was meant to afford an early relief from power shortage as the normal installation process of a power plant in the public sector takes about six to eight years. But the short-run measures have now almost been perpetuated as the government extended the tenure of most such plants and the validity of an indemnity law, made in 2010 to keep actors and their action in the power and energy sector above the customary law, on a number of occasions. The government is reported towards the end of 2019 to have paid idle power plants Tk 950 billion in capacity payment in the past 12 years till then and Tk 80 billion in capacity payment in 2018, which is said to have only added to the Power Development Board deficit. A report of the US-based Institute for Energy Economics and Financial Analysis in May says that the Bangladesh government could use only 43 per cent of the power generation capacity. The Consumer Association of Bangladesh says that the government needs to do away with all illogical and unnecessary expenses, especially in the power and energy sector, in the time of COVID-19 emergency to increase subsidy for other sectors such as health, food and employment generation.

A general holiday that had been in force for more than two months as a preventive measure against COVID-19 has put forth multiple problems and challenges amidst a shortfall in revenue generation. Experts, in such a situation, see no logic in continuing to buy expensive power from rental plants and pay for power that the plants do not produce. Such a situation provides for a ground for the government to stop squandering away public money and divert the allocation to other sectors where it is needed most. The government must not shelve out money for power that is not produced and it does not buy.

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