Turmoil in Energy Sector Lack of Long-term Planning Haunting the National Development in Bangladesh -Md. Imran
Nationwide energy shortage in Bangladesh has brought a dismal reality for the whole nation in the wake of deepening economic crisis. Skyrocketing price hike in various forms of fuels and rampant shortages of electricity for both industrial and residential usage has created a chaotic situation. Pathetically current government’s overwhelming celebration of 100% electrification in March this year did not last for couples of months as national energy policy is very badly failing to meet the needs of the citizens. Besides, unusual fuel price increment compared to international market over the years has led to the development of vicious interest groups channeling the public funds in private interests. Worsening thesufferings of ordinary consumers continue to squeeze the nerve.
It is prevalent to have a broad understanding before initiating the discussion. Interestingly crises bring forth the crises who are already in development. Starting of Ukraine war with Russia has definitely shaken the international system but could not collapse the whole system. It teaches us that those who were less prepared to tackle such emergency or inadvertent situation were disproportionately hit hard most than others. Similarly, Bangladeshi ruling political elites have been falsefully trying to align the all internal problems emerging recently in Bangladesh with Ukraine war making foreign countries scapegoat instead of revealing their limitations or unpreparedness to face a shake beyond its territory. Beyond the debate of whether Bangladesh becoming Sri Lanka or falling on earth from utopian Singapore, Bangladesh’s attractive symphony of development is slowly disappearing with the cacophony of developmental distress. Ugliness are appearing vividly in and out with the failure of unregulated market mechanism in Bangladesh as strong political grip is not enough to hold the system intact.
However, among the most amplifying problems in Bangladesh, anarchic situation energy sector of Bangladesh is coming at front. Commercial activities have been hampered due to higher electricity outages. Drop of production in various sectors including spinning and waving is creating headache for overall market functioning of Bangladesh. Negative impacts of electricity shortage on garments industry would not only give a huge economic blow to the largest export oriented industry alone, but also one the millions of poor people who directly and indirectly are involved in this sector. It should be noted that garments industry alone accounts for the 84% of total Bangladesh’s export. It is easily understandable how reliable Bangladesh economy is on this sector. Situation would be more acute in the face of significant reduction in exports but considerable increment in import cost during recent months. Government has already taken various measures to surpassed the existing crisis situation especially shifting the government and bank office hours, calling one more day off in educational institutions, issuing directives for general shops closing, appealing citizens and officials to reduce their consumption and adjustment with lesser electricity supply. Government is failing to provide relentless electricity supply to residential and industrial areas simultaneously. Load shedding is returning everywhere in the middle of the unbearable hot temperature. Frequent load-shedding in residential usage was perhaps pushed by the business lobby to channel more electricity for industries. Beyond optimal choice question, general consumers are the first to suffer the state’s cuts or inability to maintain general services. Long term policy inadequacy points the focal area in exiting energy policy of Bangladesh. Most noticeably, despite having over capacity in electricity generation, failure to provide adequate electricity supply shows how unsustainably the whole system has evolved over the years in guise of developmental rhetoric.
It is essential to shade light on the existing electricity sector of Bangladesh. Against the demand, capacity of electricity supply has surpassed. Despite having variation in existing data, it can be stated that 22,000-25700 Megawatts (MW) electricity capacity has been prepared both in public and predominantly private sectors while the highest demand for electricity in peak has been projected to be 15,000 (MW) in Bangladesh currently. This additional capacity comes at a higher price. Independent Power Producers (IPPs) have been central behind this additional capacity building. Government has to pay a quite good some amount of money behind these private producers. Even though the may not have to produce electricity as we do not have much demand, government has to pay them a fixed amount of money against their capacity to produce electricity. This method is famously called ‘capacity payment’ in Bangladesh. Statistics has shown that Bangladesh government had to pay 1.37 billion USD to 37 IPPs in the fiscal year of 2020-21. Already 16,785 corer Taka has been devised to IPPs in the first nine months of the 2021-22 fiscal year for capacity payment despite government not being able to harness more than 14000 MW since there is not much demand to fulfill. Most horrifically, more than 10,000 MW electricity supply capacity will be added by 2024-25 as both private and public electricity generations plants are currently underway. Most notably, Indian Adani group is in building a coal based electricity plant for Bangladesh in Jharkhand to produce 1200 MW electricity. Coal based power plant is also being undertaken in Payra and Rampal to add more electricity in national grid. It is not clear who will consume this extra amount of surplus electricity as Bangladesh has not been able to negotiate any settlement to supply electricity to its South Asian neighbors.
Revealing the power sources of electricity generation would be needed to explain the current state of failure to provide smooth electricity supply. More than half of the electricity is produced by Liquefied Natural Gas (LNG), while diesel and coal are two other important sources of electricity generation in Bangladesh. Bangladesh is failing to manage adequate fuel to run its power plants. There are few reasons behind its inability to input. Primarily dollar crisis by depleting foreign reserve and the lack of domestic exploration efforts and willingness to extract these energy sources in last few years. Primarily, Bangladesh has been highly concentrated on LNG powered electricity generation. It is notable that Bangladesh has been failing to supply adequate gas for both domestic and industrial usage in few years. Despite scarcity, Bangladesh government has moved to import LNG instead of exploring domestically to meet the growing demands. Consequently, excessive reliance on foreign suppliers for LNG import has created a perpetual vulnerability for Bangladesh. Amid Ukraine war, volatile world market condition has put profound stress on Bangladesh to purchase LNG from traditional sources. LNG market is very limited and expensive. But additional demand from Europe to buy LNG from the Middle East to reduce dependence on Russian gas has nearly doubled the price of the precious fuel. Dollar price increment and supply scarcity of LNG are giving a hard time for imprudent Bangladesh energy sector. Excusing Ukraine war alone by Bangladeshi ministers for the existing scarcity is not a prudent observation. Fault in the broader policy undertaking is highly responsible for the state of misery. Current energy adviser of the Consumer Association of Bangladesh Shamsul Alam has brilliantly remarked, “We have already put too many eggs in one basket, as our energy production is heavily dependent on natural gas. The reserves in the gas fields are declining.” So, the situation is not very auspicious as Bangladesh government had to suspend diesel powered electricity generation as well.
Unrest in Bangladesh energy sector is deeply embedded in state’s interest centric strategy. Government has been extracting additional profits from selling fuel oil at higher price in domestic market compared to international market. Government has been able to pocket billions of taka over the last few years but could not create any viable back-up when energy market in international market has just shaken for few months in the context of Ukraine war. And now the international price for fuels is constantly dropping.Recent price hike in fuel oil in the name of international adjustment is just another attempt to weaken the consumers in Bangladesh. Initially aligning unusual price hike with IMF loan policy and then vaguely excusing the possibility of oil laundering from Bangladesh to other neighboring countries reveal how mismanagement is involved in the energy sector of Bangladesh. In fact, no adjustment had taken yet despite drastic drop of fuel price in international market.
Whatever government’s intention isbehind its price hike of the fuel oil, its inflammatory impact on the lives and market would be pain staking in the longer run. Increasing cost of production and consumption would definitely lead to the further weakening of citizens. Careful observation is needed to demystify the politics in Bangladesh energy sector especially understanding the engagement of private sector in Bangladesh energy sector despite its traditional affiliation of state centrism.