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Paying for power

  • Published at 05:04 pm November 24th, 2017
  • Last updated at 01:25 am November 25th, 2017
Paying for power
Bangladesh lags well below the world average when it comes to providing electricity for its people. Right now, half of the rural population of the country has no access to electricity, and this does not bode well for our energy targets for 2030. The solution is for electricity prices to be raised so as to reflect the market price -- only then will the country be able to pay for building more power plants and laying down distribution lines in areas deprived of power. However, instead of a sudden hike in electricity prices next year, a better strategy would be to make a moderate increase, thereby gradually signalling to the market that electric and gas prices will be going up. As we are importing LNG to slowly replace the wasteful usage of undervalued and government-subsidised local natural gas, electricity prices will have to go up by a considerable amount, and that is a good thing. The sooner we prevent wasteful new investments -- heavily reliant on electricity and gas -- like fertiliser, steel, and cement mills, the better off we will be, as these may be infeasible later on due to high gas and electricity prices. While there may be some resistance to higher electricity prices at first, it is the ony way to ensure reliable power supplies and support industrial growth in the long run. The government cannot afford to ignore the forces of the market -- expensive subsidies which artificially keep gas and electricity prices down do us more harm than good.