THE power sector of Bangladesh was plagued with corruption, irregularities, and embezzlement of funds during the tenure of the deposed Awami League regime. In the 15 years, more than a hundred power plants had been built in the private sector without any tender. At present, the production capacity is said to be 25 thousand megawatts, but there is no relief from load shedding.
The per capita power generation capacity that the AL government celebrated was a false claim as it failed to set up distributory networks.听In 2009-2024, Bangladesh鈥檚 total expenditure on the electricity sector was $2,830 million. At the same time, 82 independent power producers and 32 rental power plants were paid at least Tk 104,926 crore as capacity charges. In other words, the power generation capacity or idle power has been a major economic burden for Bangladesh.
Most of these quick rental power plants or independent power plants were owned by Awami League leaders or businessmen close to them. According to a report of the Institutional Implementation Monitoring and Evaluation Department, major corruption in the power sector has occurred in the past decade in the name of capacity charge. In this case, due to special laws, there was no open competition, and that created an opportunity for channelling public funds into private pockets.
In the IMED report, it was recommended to take initiatives to reform the sector. IMED also says that Bangladesh鈥檚 power sector has been made a rehabilitation centre for Chinese and Indian suppliers. The report also alleged gross irregularities and embezzlement in the procurement of substandard equipment and in the process of land acquisition for the power sector. The implementation of such recommendations was clearly not a priority for the AL government. On the contrary, two officials of the ministry of planning were dismissed for publishing a report on the corruption in the power sector in 2023.听
About 100 power plants have been licensed to the private sector in the last 15 years. All the centres are sanctioned under the special law related to the power and energy sector without any kind of tender. In 2009, the AL-led coalition government undertook a 鈥榗rash programme鈥� of setting up diesel and furnace oil-based rental and quick rental power plants in collaboration with the private sector, giving direct licenses to 58 private sector firms to set up rental and quick rental power plants of various capacities. They justified the move, saying it was to increase generation capacity on an emergency basis. These firms were selected without following any recognised tendering process.
So that no one could challenge the selection process, the government issued an indemnity ordinance鈥� to provide impunity for the rampant corruption, nepotism, and partisanship that went into selecting these firms. According to this law, the model of purchase price and cost per unit of power sector is beyond accountability. No legal remedy has been found against this. This indemnity ordinance is still in operation. In this way, the power sector system became a huge burden for the government within a few years.
Even though it was time to cancel the government鈥檚 contracts with many rental and quick rental plants, the owners of those plants lobbied to renew their contracts. Meanwhile, the government decided to build the most expensive project in Bangladesh, the Rooppur Nuclear Power Plant. The AL government claimed that Bangladesh will be able to produce 2,400 megawatts of electricity if the Rooppur plant, which is being built at a total cost of Tk 1,13,000 crore with a loan of 12 billion dollars from Russia, goes into production in 2024.
Now the country鈥檚 electricity demand has increased to 11,000 to 12,000MW in winter and 15,000 to 16,000 MW in summer. Meanwhile, the country鈥檚 capacity to import liquefied natural gas and oil has greatly reduced due to the rise in international prices of liquefied natural gas听 and oil. As a result, diesel-powered power plants have been shut down since July 2022. And furnace oil-fired plants also had to adopt a production-reduction policy. At the same time, some liquefied natural gas-powered power plants are not fully utilised due to a lack of import capacity. Due to the inability to import required coal, Payra and Rampal power plants are not being commissioned properly, even though they are already in production. Meanwhile, the Power Development Board has to pay capacity charges for these liquefied natural gas and coal-fired plants.
In July 2023, the installed capacity of electricity excluding captive power stood at 24 thousand 263 MW. According to the Poewr Development Board鈥檚 calculations, at least 14,500 megawatts will be added to the power generation capacity in 2025, resulting in more than 38,700 megawatts of power generation in Bangladesh. However, in July 2023, the demand for electricity was 13,500 megawatts. Even if this demand increases at an average rate of 10 percent every year in the next two years, still 60 per cent of the power generation capacity will remain unused in 2025. As a result, bearing the burden of 鈥榗apacity charge鈥� on unused power plants will become costly for the Power Development Board.
For whose benefit has such a 鈥榤iscalculation鈥� of supply and demand of power been made? Those who have done so have pushed the country into a disaster. According to a Power Development Board report, the company鈥檚 expenditure on purchasing electricity in the financial year 2021-22 was Tk 74, 223 crore, which was Tk 51,879 crore in the financial year 2020-21. In one year, the production cost increased by 22, 344 crores. In the financial year 2021-22, the Power Development Board spent Tk 49,213 crore to buy electricity from private plants, which is 77 per cent more than the previous financial year. Dependence on the private sector in power generation has increased a lot in a decade.
At that time, the electricity sector could not get out of the quick rental system. In contrast, several large-scale independent power producers have been approved. In the process, the power sector has gone under the control of a few big corporations. In a decade, the top 12 companies pocketed about 68 per cent of the capacity charges, and 25 per cent of the total annual subsidy allocation of the country鈥檚 budget is spent on the power sector. According to Centre for Policy Dialogue, most of these allocations are paid as capacity charges.
The Awami League government approved one power plant after another and intentionally miscalculated the demand of supply for the power sector to create ways to channel public money into private pockets. The quick rental plants, which were set up as emergency steps, became part of the energy sector and bleeding the national economy in the name of capacity charge. The question is whether any government has the right to hand over this huge sum of money to a few people. It has been said that the demand for electricity in peak hours is not more than 13 thousand megawatts, and, according to a government report, it has the capacity to generate 26,000 megawatts of electricity.
Yet, the country suffers from lack of access to power. The interim government should prioritise the energy sector when reforming the public institutions, and to ensure accountability in the sector, it should consider forming an expert committee to suggest a road map for the sector. 听
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Md Sahidul Islam Sumon is an economic analyst.