Hasina leaves massive burden of unplanned development, loan

Zarif Mahmud: When the Awami League government assumed power, the average production cost of electricity was below Tk 4 per unit. In 2011-12 financial year, it was increased to Tk five. After that, for 9 consecutive years, the average cost of electricity production remained at Tk 5. However, it increased rapidly in the following years. The average production cost of electricity in the last two financial years has reached at Tk 11. It also quadrupled the loss per unit. Losses are increasing mainly due to unplanned construction of power plants and planned looting.
This information has emerged from the analysis of the Power Development Board (PDB) report. It shows that the average production cost of electricity in the fiscal year 2010-11 was Tk 3.95. Due to looting in the name of rental-quick rental, it increased to Tk 5.12 in 2011-12 financial year. Out of this fuel cost was Tk 2.97. And the average fixed cost/capacity charge was Tk 1.99 and the average variable cost i.e. operation and maintenance (O&M) cost was 16 paise.
In FY 2022-23, the average cost per unit of power generation has increased to Tk 11.04, which is the highest ever. Among the average cost of production, average fuel cost was Tk 7.11, average fixed cost/capacity charge was Tk 3.49 and average O&M was Tk 0.44. That is, the average cost of electricity production has increased by Tk 5.92 in a span of one era. But in the last three financial years it has increased by Tk 5.29.
Meanwhile, the average cost per unit of electricity generation for the outgoing fiscal year 2023-24 has slightly decreased to Tk 10.88, which is the second highest. Basically, the reduction in the prices of all types of fuel including coal in the international market has got some benefit. Last financial year, the average fuel cost decreased to Tk 5.97. That is, the average fuel cost has increased by Tk 1.14. However,
due to increase in average fixed cost i.e. capacity charge, non-fuel cost stood at Tk 4.91.
Analyzing the electricity generation data of PDB, it can be seen that the average cost per unit of electricity generation in the fiscal year 2012-13 was Tk 5.47. In the next fiscal year, it increased slightly to Tk 5.88, 2014-15 fiscal year Tk 5.85 and 2015-16 fiscal year Tk 5.10. In the fiscal year 2016-17, the average expenditure increased slightly by Tk 5.21. In the next financial year, it increased again to Tk 5.95 and in 2018-19 financial year it again decreased to Tk 5.67.
2019-20 fiscal year due to Corona, the prices of all types of fuel collapsed worldwide. As a result, the average fuel cost per unit of electricity generation in that financial year is reduced. However, due to low demand, large amount of capacity charge has to be paid in that financial year. This did not reduce the average cost of production much. The average expenditure in that fiscal year was Tk 5.58. It was the last fiscal year when the average cost of production remained at Tk 5.
In the next financial year, the average fuel cost increased to Tk 3.16. The average fuel cost in 2021-22 fiscal year increased by Tk 5.37. However, average fixed cost decreases. In those two fiscal years, the average cost of power generation was Tk 6.29 and Tk 8,54 respectively. In FY 2022-23, energy expenditure in power generation broke all records.
In that financial year, the average fuel cost per unit of electricity production was Tk 7.11. The increase in fuel oil and coal prices in the international market and increase in gas prices in the country are responsible for this. Although the outgoing financial year, the prices of oil and coal have come down in the international market. However, as the average capacity charge has increased, the benefits have not been realized much.
PDB Chairman refused to comment on this. However, several PDB officials who did not wish to reveal their names said that after 2016, licenses were given to several large power plants including Payra, Rampal, Adani. These have come into production in the last two years. As a result, capacity charges have increased. Even if the fuel cost is reduced, its benefits are not available.
Consumers Association of Bangladesh (CAB) Energy Advisor Professor M. Shamsul Alam told that despite the lack of demand, the government has licensed one power plant after another to favor a group. Its consequences are now felt. On the one hand, the amount of capacity charge has increased, on the other hand, the exchange rate of the dollar has increased significantly in the last two years. As a result, the average cost of power generation can’t be kept under control.
He said that the deficit of PDB has increased a lot due to increased expenditure. To make up for the loss deficit, the government poured in subsidies on one hand, and increased electricity prices on the other. In addition to the waste of government money, the burden on the people has increased. To control this cost, the capacity payment should be reduced by re-evaluating the contract of each power plant. Capacity charging should be stopped for idle power plants. This will reduce the average cost.
Cycle of rising power prices: The shock of rising cost of power generation could not be fully offset by subsidies. That is why electricity prices at the bulk (wholesale) level have been increased 11 times during the tenure of the Awami League government and 13 times at the consumer level. In this, the pressure of increasing cost of electricity production has finally come on the shoulders of the people.
An analysis of the increase in electricity prices shows that at the beginning of the fiscal year 2010-11, the price of bulk electricity was Tk 2.37. Currently it stands at Tk 7.04. In other words, the price of wholesale electricity has increased by 197 percent during the period of Awami League. And at the beginning of the financial year 2010-11, the price of electricity at the consumer level was Tk 3.92. Currently it stands at Tk 8.95. In other words, the price of electricity has been increased by 128 percent at the consumer level during the previous government’s tenure.