Each year, the power sector remains at the top of the list for subsidies. Experts point out that the main reason behind this is the country’s dependency on fuel oil to produce its electricity, adding that the sector will not see sustainable development unless such reliance is reduced.
Like previous budgets, the upcoming one is also reportedly seeing an increase for power sector subsidies. Sources said, subsidy allocation for the 2015-16 budget might reach Tk8,000 crore, compared to Tk7,200 crore for the ongoing fiscal year, a 10% increase.
Looking at the numbers from the last six years, it can be seen that subsidies for the power sector have experienced a rise of over 100% during this time.
Power sector specialist M Tamim suggests subsidies would reach an unsustainable level in the long run, unless immediate measures are taken to lower power costs by reducing dependency on fuel oil for power production.
The Power Development Board (PDB) suffered a loss of Tk6,000 crore during the FY2013-14 as electricity was sold at prices lower than production costs.
PDB losses were Tk5,572 crore in FY2012-13 and Tk6,350 crore in FY2011-12.
At a recent hearing on increasing power prices, it was revealed that there is a Tk1.67 difference between the production and the selling price for each unit of electricity. At this rate, around Tk7,560 crore would be needed as subsidy to meet the losses.
However, the private power suppliers continue to enjoy profits as the price of fuel oil has dropped in the international market.
According to PDB, the national grid is currently getting a total 10,806 megawatt supply each day, including the amount of electricity being imported from India.
The day the Awami League began its previous tenure in 2009, the country’s total daily power production stood at 3,268MW, while the then daily average production was 4,942MW.
With a shortfall of almost 1,700MW, the daily average amount of load-shedding then was around three to four hours in aggregate.
The government claims that power production is currently meeting the entire demand, however, the country is still experiencing an average of one hour of load-shedding per day because of faults in the supply line as well as mechanical faults.
Since the 14-party alliance government took office, almost 5.4 million new electricity connections have been provided. In two phases, 68 new power plants have been launched, taking the total number of plants in the country to 96. Several more power stations are also waiting to be launched.
During the past six years, the percentage of electricity users has climbed from 47% to reach 64%, and this number is expected to reach 90% by 2019. During the same time, the use of power consumption per person has reached 348 units from 220 units.
This success in generating the power needed to run the country, however, has come at a considerable cost. At least 25% of power production depends on imported fuel oil.
Ministry sources said that because of the falling global prices, the upcoming budget might allocate Tk800 crore for the fuel oil sector, compared to the ongoing year’s Tk5,000 crore.
M Tamim said: “The government must reduce its dependency on oil if it wants to sustain long-term success in the power sector. Currently almost 3,000MW of electricity comes from fuel-oil-based stations. Even gas will not do. Power production should head in the direction of coal.
“Once completed, the government’s projects to set up two coal-based power plants in Rampal and Matarbari will take the power sector of Bangladesh towards a stable position.”
Ministry sources said efforts to import a further 100MW of power from Tripura are under way, while efforts are also on to set up and produce electricity from the Rooppur nuclear plant with help from Russia.
The government has plans to add a further 11,000MW of electricity to the national grid by 2019. 1State Minister for Power Nasrul Hamid said: “Under the new master plan for the power and energy sector, plans have been made to invest $20bn. Of this, $10bn will come through foreign assistance, while the rest will come through partnerships, government funds, and with help from different companies.”
According to estimates, the electricity demand in Bangladesh would reach 63,600MW by the year 2040, with an annual increase of 8%. The master plan is part of an effort to meet this demand.
According to government figures, only 1% of electricity comes from alternative fuel sources. The government has announced its target of producing 10% of its power from solar and other alternative sources by the year 2020.