Billions lost in energy sector mismanagement

Reza Mahmud :

The power and energy sector in Bangladesh has faced significant challenges over the past 17 years under the Awami League regime.

Businesses, in particular, have suffered due to the lack of an uninterrupted energy supply, which has hindered production.

Industry leaders and policymakers have emphasized the importance of collaboration between the government and the private sector to ensure energy security and sustainability. They also called for government support to foster a stable environment for investment in the energy sector.

Experts stressed the need for extensive reforms, describing energy and power as the lifeblood of the national economy.

They noted that widespread mismanagement and inefficiencies have prevented the sector from boosting production, largely due to acute shortages of gas and electricity.

Moreover, a large amount of government funds has been drained through the losses of various state-owned agencies, including the Bangladesh Power Development Board (BPDB).

A recent study by the Centre for Policy Dialogue (CPD) revealed that the BPDB incurred losses of Tk 11,765 crore in 2022-23, despite frequent tariff increases.

The study also noted that the government paid Tk 39,535 crore in subsidies and Tk 28,000 crore in capacity payments in the last fiscal year. As of June, the outstanding payments to independent, rental, and quick rental power plants stood at Tk 10,000 crore, while the outstanding payment for power imports from India amounted to Tk 5,736 crore as of August.

Dhaka Chamber of Commerce and Industry (DCCI) President Ashraf Ahmed emphasized that uninterrupted energy supply at sustainable prices is crucial for maintaining the economy.

Without a steady supply of energy, businesses cannot recover lost work hours or achieve growth in employment. He urged the government to take action to ensure consistent energy supply for businesses across the country.

Energy expert Professor M. Shamsul Alam highlighted the need for the government to reform the sector and shift its focus from profit-making to providing essential services. He stressed that the energy and power sector must be held accountable through well-planned strategies.

Secretary General of the Bangladesh Association of Pharmaceutical Industry, SM Shafiuzzaman, also emphasized the need for immediate reforms in the energy sector, citing the struggles of production sectors due to insufficient power supply. Energy experts like Dr. Ijaz Hossain, M. Tamim, and BD Rahmatullah echoed these concerns, with some suggesting the formation of a reform commission to bring widespread changes to the sector.

Dr. Badrul Imam, a former professor of Dhaka University, argued that a reform commission is essential to support industrialization and employment. CPD Research Director Khondaker Golam Moazzem also stressed the need for major reforms due to inefficiencies, lack of transparency, and dominance of conglomerates in government decision-making processes. He pointed out that irregularities and waste in the power and energy sector are contributing to economic instability.

It was reported that 13 out of 16 quick rental power plants are still operational, even though they were supposed to be retired by 2023.

The government has paid Tk 1.05 trillion over 14 years in capacity payments, using subsidies from the national budget. For the 2024-25 fiscal year, Tk 40,000 crore, or 37 per cent of the total subsidies, is allocated to the power sector.

Stakeholders suggested that the government could enhance industrial capacity by canceling the 15 per cent tariff on fossil fuels and stopping profit-making from diesel, allowing industries to install captive power plants and avoid load shedding.