Originally published in The Financial Express on 13 July 2023
The developments in the country’s power sector for more than two decades have given rise to many questions, but answers have not been forthcoming. Instead, there were attempts to sidetrack the issues with notable defiance noticed in the deliberations made by some people in authority from time to time.
For instance, a contemporary vernacular daily some days back reported that 60 per cent of the country’s power generation capacity would remain idle in 2025. The situation is not anyway better now. The utilisation of generation capacity is said to be a little over 50 per cent. In contrast, a large part of the country is still being subjected to load-shedding by state power distribution companies.
A couple of years back, many had thought the load-shedding to be a thing of the past. But soaring fuel prices in the international market first and then the greenback crisis in the central bank’s vault have brought back the problem.
There was a time when the authorities asked many private power plants to sit idle and enjoy ‘capacity payments’ because of the mismatch between power generation and power demand. Now there is a demand, but power plants cannot operate at full capacity for fuel shortages. The dollar crunch remains the main problem.
The installed power generation capacity at the moment is 24,263 megawatts (MW). The power demand is now estimated at 13,500 MW. The generation capacity is expected to rise to nearly 39,000 MW by 2025 with a good number of power plants coming to the stream by then. Large power plants like the Rooppur nuclear power plant and Matarbari thermal power plant are among the plants that are in different phases of implementation.
There is no denying that the country was heavily power-starved two decades back. Severe load-shedding was a routine affair and people’s sufferings knew no bounds. In 2010, the then government, led by incumbent Prime Minister Sheikh Hasina, came out with a stop-gap arrangement for addressing the problem of severe power shortage. Since the construction of conventional power plants takes time, it decided to invite the private sector to set up small power plants that are capable of generating power within a short period. The government took unsolicited offers from the private sector people for setting up such plants offering sweeteners such as capacity payments. However, the list of incentives became longer over time.
The government enacted a law in 2010 to give legal coverage to activities that it had thought necessary to initiate for quick generation of power. But one particular provision in the said act has drawn flak from various quarters. The provision in question offers full protection for the persons involved in taking decisions in the matters of power and energy sector against prosecution. The law had a life for two years, but it is still alive because the incumbent government felt such a necessity.
The government has, reportedly, made capacity payments worth Tk 900 billion to the private power plants for its failure to buy power from the latter. The amount is only a part of the benefits that private power plants have been reaping for the last two decades or more. Some wrongdoings in such payments are not unlikely when there is a protective piece of legislation.
The country needs enough power, no doubt. But if 50 per cent of the generation capacity remains idle for lack of enough transmission lines, shortage of fuel oils and gas and slow growth of production units, the problem of overcapacity continues to brew.
So, the government’s move to create sufficient power generation capacity needs to be synchronized with activities that will lead to efficient transmission and growth in demand for power.