Undesirable transformation

Dhaka,  Thu,  25 May 2017
Published : 14 May 2017, 21:14:06
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Undesirable transformation

The establishment of rental power plants was a quick-fix solution to nagging power problem notwithstanding the fact that the process of granting permission was not adequately transparent. Moreover, the solution only intensified the financial woes of the  people due to frequent hikes of power tariff, writes Shamsul Huq Zahid
The state-owned Power Development Board (PDB) that once dominated the power sector as a producer has reportedly assumed the role of a buyer of electricity from the private operators in the sector. 

This particular transformation is hurting the PDB much, at least, financially. Its yearly losses have been climbing up, unabatedly, due to the purchase of power at exorbitant rates from the private sector independent, rental and quick-rental power plants. 

But the PDB, it seems, does not mind the losses it has been incurring. Rather, a section of unscrupulous people on the payroll of the PDB have been relishing the dominance of the Board as a buyer of electricity from the private operators in the sector. One can well guess the reason for their becoming so interested to see the PDB as buyer, not producer, of electricity. 

The purchase of electricity from private power plants involves transactions worth billions of taka every year. It is alleged that a sizeable amount of unearned money goes into the pockets of some corrupt officials. The so-called 'capacity payment'--- a mandatory payment that the PDB makes to the private power plants if it fails to purchase electricity from the latter---has become a very effective conduit for making illegal transactions.

That the PDB is not interested to expand its role as a power producer is adequately substantiated by statistics. Until the financial year 2009-10, nearly 70 per cent of the country's total power generation capacity did belong to the PDB. The share reportedly has now come down merely to 43 per cent. 

In fact, the PDB's decline as a power producer started as soon as the government chose to grant permission to the private sector people for setting up of a substantial number of cost-intensive rental and quick-rental power plants in the year 2009-10 with a view to meeting a wide gap in the demand for, and supply of, power at that time. It was a quick-fix solution to nagging power problem notwithstanding the fact that the process of granting permission was not adequately transparent. Moreover, the solution only intensified the financial woes of the poor power subscribers due to frequent hikes of power tariff.  

In the fiscal year 2009-10, the power plants belonging to PDB generated nearly 3,500 MW out of 5,000 MW generated in total. The total generation capacity now stands at over 15,000 MW, including 6,500MW generated by the public sector power plants. 

The PDB initiated a number of medium and large power projects so that the rental power plants can be phased out as early as possible. But that did not happen. As the PDB, deliberately or otherwise, has been slow in project implementation the government extended the life of a relevant law, at least, on three occasions with the objective of continuing the operations of the rental power plants. 

In the financial year 2015-16, the PDB purchased electricity worth Tk 200 billion from power plants, 20 per cent of which went to the public sector power plants that make available power at rates much lower than that of the private power companies. The delay in beefing up PDB's own power generation capacity is taking a toll on the power subscribers. The implementation of large coal-based power plants and the sole nuclear power plant in the public sector would, naturally, take time. Thus, it is imperative for the policymakers to ensure that other power projects in the public sector are completed on time for the sake of poor subscribers. 

The government, in the meanwhile, has allowed the private sector furnace oil-fired power plants to import fuel duty-free. Besides, these plants are having financial benefits in the form of service charge for the import of fuel. 

The fact remains that the relevant authorities are quite generous as far as providing financial benefits to the private power plants are concerned. The size of benefits, according to many, is more than what the latter deserve. But the private power plants, unfortunately, are not interested to pass on even a small fraction of the benefits to millions of power subscribers. Had they been a bit sympathetic towards the cause of the power subscribers they would have fixed the selling price of power at a lower level. Why blame the private plant owners? The PDB appears to be more interested to fatten the purse of the owners than providing relief to power subscribers. 

The power tariff has gone up substantially in recent years. The hike is hurting the domestic as well industrial consumers. It is more likely that there would be another hike to cover the recent upward revision of gas prices. The life of poor consumers would be made more difficult in the event of such a hike. 

The government should gradually move away from the process of power purchase from rental power plants and build more and more conventional power plants within the shortest possible time to provide relief, in terms of power tariff, to millions of power subscribers.   

zahidmar10@gmail.com

 
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