Bangladesh’s electricity generation sector has reportedly suffered losses of at least $6 billion, which amounts to approximately 720 billion taka at the current exchange rate of 120 taka to the dollar.
According to a report from the White Paper Committee, $3 billion of this sum was looted as commission for the construction of new power plants.
An additional $3 billion was taken by the private sector through plant rents and extra profits, despite not operating the plants.
The report was presented last Sunday by Debapriya Bhattacharya, head of the White Paper Committee, to the interim government’s chief advisor, Dr. Muhammad Yunus.
The committee was formed after the fall of the Sheikh Hasina government on 5 August to assess and present the overall economic situation of the country.
Titled “Power and Energy Sector: A sector established to facilitate corruption,” the report exposes widespread corruption within the sector.
It highlights the controversial Quick Enhancement of Electricity and Energy Supply (Special Provision) Act-2010, which has been repeatedly extended, creating opportunities for corruption.
On 30 November, the interim government repealed this law through an ordinance. The White Paper also details allegations that the previous Awami League government facilitated the construction of power plants in exchange for commission.
While there are no official records of these transactions, the report suggests that, in conservative estimates, 10 per cent of each project was diverted as commission.
As a result, of the $30 billion spent on power plant construction over the past 15 years, $3 billion was reportedly siphoned off as commission.
The Awami League government has put the country’s economy at risk by expanding power generation capacity beyond actual demand. While power plants were built, they could not be operated effectively due to a lack of fuel, resulting in inadequate electricity supply during peak demand times.
This has caused widespread power outages, affecting both the general public and industries. At the same time, the prices of electricity and gas have been increased. The government’s flawed policies and planning have created opportunities for corruption and waste in the power and fuel sectors.
Under the contracts for power plants, a fixed rent must be paid regardless of whether electricity is generated. This includes additional plant rent for power plants that remain idle without producing electricity.
The White Paper Committee found it challenging to calculate this additional plant rent. According to their report, from the 2010-11 fiscal to 2023-24, the private sector received 1.15 trillion taka in rent for power plants. During this period, the plants’ capacity was used at an average rate of only 42 to 46 per cent which clearly is an outcome of inefficient management.
However, power plants could achieve up to 65 per cent capacity if managed properly. At the end of the contract period, the rent for oil-fired power plants was renewed, allowing these plants to generate additional profits.
In total, private sector power plants have received at least $3 billion (360 billion taka) in additional plant rent.
The committee’s sources also pointed out that numerous projects worth billions of taka have been carried out for constructing distribution and transmission lines, purchasing meters, and ensuring 100 per cent electrification across the country.
There are allegations of additional costs at the Rooppur Nuclear Power Plant, but the report does not definitively highlight irregularities or corruption in these projects.
Additionally, the issue of corruption in the import of fuel oil in the energy sector remains underexplored. The committee suspects there may be looting in the import of liquefied natural gas (LNG).
Moreover, projects for drilling wells in various gas fields across the country have been carried out at inflated costs. The committee notes that 20 wells were drilled by the Russian state-owned company Gazprom at a cost of over $20 million each, while Bangladesh Petroleum Exploration and Production Company Limited (Bapex) could have done the same work for just $10 million.
The White Paper Committee has also accused officials and employees in the power and energy sectors of being appointed without proper notifications and in exchange for unethical financial benefits.
According to their report, tenders were often manipulated, with work being awarded under the guise of competition between different companies within the same group.
Additionally, close associates of high-ranking ministry officials were reportedly given subcontracting opportunities, where the main contractor sublets the work to smaller contractors, allowing them to benefit financially.
The section of the report covering the power and energy sectors was led by M. Tamim, a member of the White Paper Committee and a professor at BUET, who also served as the special assistant on energy to the former caretaker government’s chief advisor.
Speaking to Prothom Alo, Tamim explained, “The report provides an approximate idea of the corruption and irregularities, but it is far from exhaustive.
There are numerous other projects in the power sector beyond production, and various projects in the energy sector beyond imports. Given the limited time, it wasn’t possible to capture all the irregularities in detail.”