Originally posted in The Business Standard on 30 May 2022
Soon after independence, on a fine morning of 31 May 1972, the Bangladesh Power Development Board (BPDB) was formed by presidential order.
Its purpose, simple on the surface, was gargantuan at the time: produce, transmit and supply electricity across an energy-starved country.
At the time, its power generation capacity was only 500 megawatts (MW), which it had inherited from the East Pakistan Power and Water Development Authority.
Fast forward 50 years, its current capacity has reached 6,013MW. The increase could be commendable, except it pales in comparison to the total power generated in the country.
Over the five decades, the state-owned organisation has played a pivotal role in ensuring people’s right to electricity. But as the lone purchase of electricity from public and private power plants, the BPDB has been saddled with liabilities, with its debt amounting to a staggering Tk68,567crore.
At the same time however, the organisation’s scope of influence has been curtailed, with it acting as an intermediary between power production and utility distribution companies, a complete deviation from its original role.
Prof Dr M Shamsul Alam, energy expert and senior vice-president of the Consumers Association of Bangladesh, said, “The main purpose was that BPDB will lead the technically skilled manpower making programme to develop the power sector of an independent country. But it is no more a technical organisation. No professionals have been produced from this organisation,” he said.
No BPDB officials were willing to make a comment in this regard.
Initially, the BPDB also owned the total power capacity in the country. Over the years, however, it has become weaker and lost its power generation capacity to private and public companies.
At present, BPDB has 6,013MW power generation capacity which is 19% of the country’s total capacity – 22,348MW.
Even fourteen years back (in 2007-2008 FY), the BPDB’s power generation capacity was 74% of the total output.
On the other hand, the share of the private power producers reached 49.7%, up from 26% or 1,388MW (including 58MW rental) in the 2007-2008 fiscal year.
Cloaked in debt
Besides losing its production capacity, the BPDB also lost its financial strength over the years. Now, it has become an organisation with the highest amount of debt.
In the 2007-2008 FY, the BPDB’s total liabilities was Tk6,550 crore. Of this, Tk4,204crore was in government loans and Tk2, 346 crore in foreign loans.
Within 14 years, the size of the debt increased by 946.82% to Tk68,567crore. Foreign loans reached Tk13,111crore.
Fourteen years ago, the BPDB received no budgetary support from the government, but since support became available, its debt mounted.
Talking about the BPDB’s rising debt, Professor Dr Shamsul Alam said, “It was a wrong decision to turn BPDB into a commercial organisation. Power and energy sectors cannot be commercial.”
As it became a commercial organisation, it attempted investments at higher interest rates. At the same time, to increase money flow, it started amassing debt.
Professor Mohammad Tamim, energy expert and the former special assistant to the chief adviser of a caretaker government, said the BPDB’s inefficiency and the government’s policy are both responsible for the state-run organisation’s present financial situation.
“The government has handed money to the BPDB in the form of a subsidy for supplying high cost electricity to the consumers at a low rate. Now, that subsidy has turned into debt,” he said.