Wrong power policy cause of Tk 44,000 cr love debt

Mahfuja Mukul : Energy experts and economists have commented that the government, which is in trouble with the debt of about Tk 44 thousand crore in the power and energy sector of the country, is still unable to understand the depth of the crisis.
According to the latest estimates, the private power plants producing in the country owe about Tk 25 thousand crores to the Power Development Board (PDB). PDB owes gas bill to Bangladesh Oil, Gas, Mineral Resources Corporation (Petrobangla) to the tune of around Tk 8,000 crore.
India’s Adani owes about $500 million (about Tk 5,500 crore) in electricity bills. Foreign suppliers will get about $270 million (about Tk 3,000 crore) from Bangladesh Petroleum Corporation (BPC), a government-owned oil importer.
And Chevron, the US company that extracts gas in Bangladesh, will get $200 million (about Tk 2,200 crore) for the gas price. Apart from this there are dues in some other sectors. In total, the total debt amount is about Tk 44 thousand crores.
On the one hand, the government is not able to pay the price of electricity to the private centers on time due to lack of cash, on the other hand, due to the lack of dollars, the debts of foreign companies in the power and energy sector have to be kept in arrears.
In such a situation, doubt has arisen whether the additional gas, coal and fuel oil needed to run the power plant can be imported during the hot season in March.
Professor M Shamsul Alam’s opinion in this regard, “The current crisis (in the power and energy sector) was not created in a day. It did not press upon the nation suddenly or by accident. Day by day this crisis has been accumulated.
He said, “We have been saying for the last one and a half decades not to do the initiatives that have been taken in the implementation of various projects related to this.” I am now suffering from the many-faceted impact of the fear that I have been talking about.
We have had a bad experience in this too. The government is now going to build an oil refinery with S Alam Group. It is a terribly suicidal decision.’
Explaining the matter, this professor said, ‘The way you and I understand this matter now, the government should also understand that we are really in crisis. The government has to admit the mistakes and short-sightedness that have caused this crisis and try to move on from there. People should be involved in that effort. Disorganization, distress or crisis – whatever we call it, the government has to deal with it.’
Shamsul Alam also said, “Until this basic matter is seen within the government, it will not be possible for the government to deal with any problem.”
Regarding various mismanagement of power and energy sector, this expert said, “The government is the master and controller of the fuel sector. Or the government means them. But this realization is not seen in the government till now. I think this is the crisis.
He said, “We have brought this situation for four reasons. One is Speedy Act. The rapid development of Electricity and Energy Supply Act has made investment in the sector uncompetitive and increased predatory spending. Increased opportunity for profit earners. This has created a huge deficit in the sector. It is unfair, unreasonable and only benefits investors and their behind-the-scenes commission earners. Electricity and energy sector should be saved by stopping this law. But no one is bringing it up.
Shamsul Alam said, “In the case of increase in the price of fuels like LPG, LNG and coal in the government or private sector, it is necessary to thoroughly judge whether the value addition being done in different segments of the supply chain is reasonable or not. This trial is not happening.
In addition, BERC has changed the law by abolishing public hearings and now increasing the price of electricity every month. This is also a very suicidal decision.
The professor also criticized the commercial management of government-owned companies in this sector. He said, ‘Government-owned companies are being run commercially. It can be seen that those companies are owned by the officials of the Department of Electricity and Energy.
It caused a major disaster. As owners they are licensed traders. Again, as a government officer, they are in charge of the secretary, additional secretary of the energy department. A regulator can never be an owner. The owner can never be the regulator. This place must be demolished. Government-owned companies should move away from commercial operations and provide services at affordable prices.
So, we have to try to get out of the reasons due to which these problems have been created. This is not possible in the short term. In other words, this problem will not be solved by printing money.
At the same time, Shamsul Alam commented that no project can be jointly owned by the government with the private sector and said, “We have had a bad experience in this too. The government is now going to build an oil refinery with S Alam Group. It is a terribly suicidal decision.’
Professor Anu Muhammad said about the matter, “People can’t take the responsibility of the debt that has been created in the electricity sector. Because the government’s debt has increased while producing electricity for the people, this is not the case. But the government is trying to present the matter in such a way that we have to give subsidy, we have to pay subsidy. So, the price should also be increased.
He commented, ‘The increase in production cost in the fuel sector is due to the import of LNG and the taking up of totally import-dependent and debt-dependent projects. It was not inevitable. If it was the case that there was no other way without taking loans, without bringing LNG, then there was an argument.
He said, “If you have to import fuel from the world market, there will be no price stability, there will be no assurance.” The global market can become unstable due to various reasons, including war – these were known.’
Anu Muhammad feels that the government has done this to ‘please’ some local and foreign business groups for ‘political reasons’. He said, “In this there was a matter of financial interest, there was a matter of political decision.”
But as an alternative to this, the government has not done the work of increasing the production in the country’s land and sea chest gas fields or conducting long-term exploration at all, this professor said. He said, “As a result, the dependence on LNG has increased. The same has happened with coal-fired power plants. This would not have been necessary if the gas exploration had continued. As a result, the debt has increased. Nuclear power plants-that’s a huge debt. Its production cost will also be high. Apart from this, there is the problem of corruption and commission in the entire power sector. Why should people take responsibility for this?’
If the price of electricity is increased due to these things, if the subsidy is removed, it cannot be accepted, Anu Muhammad said, “The reason for which you (the government) are giving the subsidy must be removed. If you remove the wrong decisions, you have taken while protecting the interests of the business groups, there will be no liability.
This economist also commented that due to these liabilities, electricity prices have to be increased repeatedly while helping ‘some groups’. He said, ‘The whole economy is being affected. Currently, this power sector is one of the sources of financial crisis. The pressure is on the dollar to repay the foreign debt. Extraction of own gas does not require any foreign currency. But importing LNG requires foreign currency, importing coal requires foreign currency. As a result, there is pressure on the reserve.
He said, “Whenever the production cost is increasing due to import and debt, the process of increasing the price is also going on. And if the price increases, its multi-faceted effect can be seen. Increase in cost of electricity means increase in cost of production of other goods, increase in cost of fuel means increase in cost of transportation, increase in cost of living of people, increase in inflation. One of the sources of our suffering at present is this power sector. This is one of the sources of the macroeconomic level that is going towards a total disaster.
According to Khandkar Golam Moazzem, the actual amount of debt that is being talked about in the electricity and energy sector is much higher. He said, “In it there are debts received in foreign currency, i.e. dollars. Those who are in the country also have arrears. Considering them, the amount may be more. Now the government is taking initiatives to partially meet the money demand by printing bonds. But the dollar crisis is difficult to find. In addition, the government is trying to get these dollars by borrowing. Or requesting someone for late payment. Neither of these two is actually sustainable at the moment or in the long run.
He commented, ‘As a result, the energy sector is under considerable challenges. Its immediate solutions are difficult and long-term challenges. It doesn’t seem possible to get out of here suddenly. At least if the price of fuel oil in the international market does not come down in the pre-Covid period, then there is no indication that our situation will be normal.
So, we have to try to get out of the reasons due to which these problems have been created. This is not possible in the short term. That is, this problem will not be solved by printing money,’ he added.
Golam Moazzem said, “We have created a large amount of surplus electricity capacity. While charging the huge capacity of those power plants, at the same time trying to solve the problem by relying on imported LNG instead of domestic gas. That also posed a challenge. So, the government should work on the initiative so that after one year at least a comfortable situation can be reached.
For this reason, this researcher thinks that in order to get out of the capacity charge of the power sector, the condition of ‘no electricity no pay’ should be used in the case of any new power plant. He said, “We have to negotiate with the existing power plants. Because in such a complex situation, any country has the opportunity to negotiate the terms of any agreement.
Golam Moazzem also insisted on not renewing the contracts of power plants whose contracts are ending. In addition, he said that there is a fear of further increase in the cost of importing any type of fuel in the future, he said, “On the one hand, the net reserve is much less than the amount we are talking about as there is a huge amount of money unpaid.” That means there will be more pressure in the coming days in terms of foreign transactions, the exchange rate of the rupee will be weaker.
“The longer we stay in this type of financing model-arrears, defaults-the weaker our international credit rating will be,” he said. This will create problems in getting international loans-be it at the G-to-G level or G-to-B level. At the same time, the security of all these loans for the risk factor will also increase.