Losses should worry PDB
THE New Nation reported on Friday that the Power Development Board (PDB) has become a reckless loser on state exchequer as its cumulative loss stands at Tk 50,000 crore since the independence. The main cause of the loss is higher production cost of as against lower tariff rates for consumers and unchecked theft. It lost Tk 6,233 crore during the last fiscal. It appears that nobody – the present government and the past ones have ever looked at the problem realistically and only ran the organization mainly based on borrowing to show that they are running it. But the huge losses as the news item has produced is the manifestation of the incompetence and lack of vision of the successive governments how to put a stop to the growing losses while people were forced to pay higher electricity price when the loss never come to stop from spiralling.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid Bipu is reported to have said the government is working to fix the power tariff at market rates to reduce the losses and bring improvement to PDB’s financial condition. It has therefore proposed a 41 percent tariff hike to Energy Regulatory Commission aiming at achieving a break-even point where ‘no gain no loss’ point will bring a stop to new losses. It appears that the Minister is talking without responsibility to the people, because his policy to fix the electricity price based on production cost means consumers would be forced to pay higher rates – no matter it will remain at affordable level for households and sustainable for industries to remain competitive. The organization must be totally overhauled to plug the losses.
It appears that PDB used to incur losses in the past for charging lower rates while the gap was always overcome through huge government subsidy. But now such subsidy has almost been withdrawn and the loss is mainly resulting from exorbitantly high buying cost of electricity from rental power plants. Unsolicited power plants are adding to more losses while the cumulative loss has almost totally crippled the entity financially. It is almost impossible now to run the entity without more and more borrowing from banks while withholding loan payment at the same time. It is one of the biggest defaulters of loans to state-owned banks which stands at the moment at over Tk 11000 crore making those banks also sick.
The State Minister’s claim that steps have been taken to reduce system losses, electricity theft and prevent illegal connection to narrow the losses is nothing new. We are not sure who runs these ministries because the advisers are more powerful than the ministers. We will hope that PDB officials shall worry about losses.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid Bipu is reported to have said the government is working to fix the power tariff at market rates to reduce the losses and bring improvement to PDB’s financial condition. It has therefore proposed a 41 percent tariff hike to Energy Regulatory Commission aiming at achieving a break-even point where ‘no gain no loss’ point will bring a stop to new losses. It appears that the Minister is talking without responsibility to the people, because his policy to fix the electricity price based on production cost means consumers would be forced to pay higher rates – no matter it will remain at affordable level for households and sustainable for industries to remain competitive. The organization must be totally overhauled to plug the losses.
It appears that PDB used to incur losses in the past for charging lower rates while the gap was always overcome through huge government subsidy. But now such subsidy has almost been withdrawn and the loss is mainly resulting from exorbitantly high buying cost of electricity from rental power plants. Unsolicited power plants are adding to more losses while the cumulative loss has almost totally crippled the entity financially. It is almost impossible now to run the entity without more and more borrowing from banks while withholding loan payment at the same time. It is one of the biggest defaulters of loans to state-owned banks which stands at the moment at over Tk 11000 crore making those banks also sick.
The State Minister’s claim that steps have been taken to reduce system losses, electricity theft and prevent illegal connection to narrow the losses is nothing new. We are not sure who runs these ministries because the advisers are more powerful than the ministers. We will hope that PDB officials shall worry about losses.
