The interim government is focusing more in reducing cost in the power and energy sector instead of raising electricity price as tool for cutting growing subsidies, Energy Adviser M Fouzul Kabir Khan said on Monday.
The cost reduction measures include raising the number of fuel suppliers and minimise charges associated with energy imports.
“Our energy procurement cost is way high. Our average electricity price is Tk 8.9 per unit compared to more than Tk 11 purchasing cost,” the adviser told a session on ‘Building Sustainable Future: Connectivity and Energy’ at a two-day dialogue, organised by the Centre for Policy Dialogue (CPD) in the capital.
As a result, the country has to provide Tk 42,000 crore subsidy on the power sector and another Tk 20,000 crore on energy. This subsidy should have been given to education and health, where actually it needed, he pointed out.
Elaborating the government strategy to address the issue right now, he said, “What we’re trying to cut subsidies — we’re focusing on reducing cost in the power and energy sector. Our vehicle to do so is opening up the market.”
“You’ve noticed we’ve not increased the electricity tariffs over the past six months, although there is a decision to increase the price in every two months,” he added.
Over the past six months, he mentioned, the interim government has repealed the 2010’s special Act replacing it with the open tendering method. And efforts are already yielding dividends.
Now, liquid fuel is being imported through the BPC.
Earlier, the number of liquid fuel suppliers was only four as there was a restriction that the supplier shall have an ownership of refinery, Fouzul said, adding that the number has now risen to 12 after lifting the restriction.
He noted that anyone without having ownership of refinery, but having experience of supplying 5,000 metric tonnes of fuel is now considered an eligible supplier. “The result was dramatic.”
Freight and other charges have dropped 35 percent and Tk750 crore has been saved in six months, he mentioned. “If the trends continues, Tk1,500 crore will be saved this year,” he expected.
In the power sector, the government is renegotiating tariffs and trying to set a benchmark for different source of fuel used to generate power. This has already been introduced in Matabari, and the same principle will be applied in all the coal, gas and fuel oil based plant, he stated.
“So our basic strategy is to reduce cost so that increasing power price is not necessary and if, necessary, it would be moderate,” he told the audience virtually.
During winter, the demand for electricity in Bangladesh hovers between 9,000 and 10,000 MW, but it jumps to 17,000 to 18,000 MW during summer thanks increased demand or irrigation and cooling.
Of the increased demand during summer, irrigation load constituted nearly 2,000MW and the rest of the load come from cooling.
Urging all the citizens to keep ACs at 25 degrees, the energy adviser said: “If we’re able to do that, 2,000MW of electricity can be saved. And at the same time, load shedding can be minimised during Ramadan and summer.”
Giving example of Malaysia, he said even though the country has no supply shortage, it follows the rule to lower carbon footprint.
In reply to a question, he said the interim government, in its short-term, does not want to see any demonstration further by taking any concrete decision on coal extraction and seeks leave it for the elected government.
In response to another question, he said the government has no plan to stop battery-run rickshaws as a lot of people’s living depends on these three-wheelers.
Instead, they will be made to pay for the charging through legal electricity connections, while solar charging stations are being promoted, he stated further.
Dr Ijaz Hossain, an energy expert, remarked that Bangladesh’s energy and power sector is a “perfect example of what an autocrat can do.”
He expressed doubt that Bangladesh will be able to come out of the problem, saying that even if it succeeds, it may be limping for a long time.
“All the things were done in the power and energy sector in a corrupt manner during the last 15 years,” he said. He slammed the PDB officials for not being able to raise questions why so many power plants were being set up.
Dr Ijaz criticised the past government for putting excessive focus on base load power plants instead of intermediate and peaking plants.
He noted that 12,000MW gas-based base load power plants have been built up in Bangladesh.
In addition, the country has set up HFO-based intermediate and peaking power plants while they should have been powered with renewable energy, he said, adding that power generation cost is Tk 25 per unit for HFO-based plant.
He described Bangladesh’s current situation in energy and power sector as “energy famine” and said Bangladesh is living beyond its means as the sector will require $20 per year.
Former energy adviser to a caretaker government Dr M Tamim moderated the session.
