Originally published in The Financial Express on 23 June 2023
Speakers at a dialogue on Thursday warned that the country’s annual energy import bill is set to double to US$ 20 billion by 2030 from the existing $10 billion, if the government focuses more on import.
They also accused the government of neglecting the domestic gas-sector development and promoting import of expensive liquefied natural gas (LNG).
To meet the growing LNG import bill, the fund for gas development has been used, which is a major counter-measure towards gas sector development
LNG import should be reduced and LNG-based processing plants should not be encouraged, they added.
Local think-tank Centre for Policy Dialogue (CPD) organised the dialogue – “Addressing Power and Energy Related Challenges: Proposed Measures at the National Budget FY 2023-24”.
CPD research director Khondaker Golam Moazzem delivered the keynote paper in the dialogue, where Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) senior vice president Mostofa Azad Chowdhury Babu was the guest of honour.
The CPD in its presentation opined that the burden for capacity payment has been sky-rocketing, which is difficult to accommodate even with subsidy.
Against the backdrop of huge generation capacity, the state-run Bangladesh Power Development Board’s (BPDB) financial condition is getting worse over the years, and its operating loss reached Tk 274.77 billion in FY’22 from Tk 62 billion in FY’18.
The BPDB incurred the financial loss largely due to increasing requirement of capacity payment to the independent power producers (IPPs) as well as rental and quick rental power plants, it noted.
The amount of subsidy increased from Tk 40 billion in FY’17 to Tk 230 billion in FY’23, which is apprehended to rise to Tk 320 billion in FY’24.
The burden of capacity payment will continue to rise and it will be difficult to pay in the future, the CPD noted.
The ongoing plan of setting up new power plants, having the generation capacity of around 6,218 MW, by 2025 will increase the excess capacity in the upcoming years and thereby will further raise the pressure on capacity payment.
By 2025, the over generation capacity will be as high as 14,166 MW, which will be about 46 per cent of the total generation capacity.
If the power demand remains the same, as it is in current year, the over generation capacity will be as high as 50 per cent, it opined.
The BPDB paid the capacity payment of FY 2021-22 in FY 2022-23 using the allocated subsidy of FY’23, which was around Tk 170 billion. The aggregated unpaid capacity payment in FY 2022-23 is expected to be Tk 280 billion.
The CPD paper was also critical over the government’s ‘sluggishness’ in implementing renewable energy projects.
Although the renewable energy target is set at 40 per cent by 2041, the total installed renewable energy-based generation capacity is only 1,183.63 MW at present, which is only 4.30 per cent of the total installed capacity.
It also opposed continuation of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, which is anti-competitive and perhaps the reason for inefficient and less competitive contracting parties in power and energy sector.
The think-tank also opined that load-shedding will continue in the coming months or years, which will increase sufferings of households and businesses as well as hamper industrial and commercial activities.
Speaking on the occasion, the FBCCI senior vice president said many industries are suffering from gas and electricity crisis.
Some industries are not getting electricity for five to six hours, he noted, adding that the main problem lies with US dollar crisis.
Energy expert professor Badrul Imam underscored the necessity to utilise state-of-the-art technology to ramp up natural gas production from local gas-fields.
Although Titas, Rashidpur and Kailashtila along with Chevron-operated Bibiyana gas-fields are similar in nature, Bibiyana’s gas output is 10 times higher than other fields, as the US firm is applying latest technology, which the local firms lack, he added.
Bangladesh should go for drilling at least 25 wells annually in an attempt to ramp up local gas output and reduce dependency on energy import.
Energy adviser of Consumers Association of Bangladesh (CAB) professor M Shamsul Alam alleged that despite recommendations the government did not create a price stabilisation fund to provide emergency funding support to the energy sector.
Amendment to the BERC Ordinance 2022 has weakened the governance structure. The Bangladesh Energy Regulatory Commission (BERC) now consults with the government before any move towards holding a public hearing on retail power tariff hike proposals, he added.
The government has amended the BERC Act 2003 to create scopes for taking arbitrary decisions on raising retail and bulk power and energy prices.