Power sector plans and polices are rife with discrepancies

The government has hiked the price of electricity once again. Was there no alternative?

M Shamsul Alam: Of course there were alternatives. There needed to be resistance against this unlawful and illogical increase in price. The government did not choose to take such measures. Increasing the cost of electricity at regular intervals is sheer oppression of the people.

Secondly, they did not consult the consumers when increasing the price of electricity. There is the Bangladesh Energy Regulatory Commission law in place. If there was a public hearing concerning the hike in electricity prices, the people would get to know how much the government is spending in various sectors, why the government is having to subsidise. There are three laws to protect consumers’ rights in Bangladesh – the Consumers’ Rights Protection Act, the Competition Act and the BERC Act. All of these were enacted by the government. Yet they are the ones to infringe upon the consumers’ energy rights. There is not scope to forcefully impose the price rise on the consumers, but that is exactly what is being done.

On 29 February, the state minister for energy Nasrul Hamid announced that the increased price of electricity would to be paid from 1 February. Can such a retrospective decision be taken?

M Shamsul Alam: The government cannot do this. This is a violation of the government's contract with the people. And if the government can take such retrospective decisions, then it must also return the inflated costs it charged for fuel in the past. Petrobangla or BAPEX, which runs on taxpayers' money, cannot make profits in accordance to their law, but they are doing that. The government is ignoring the people's interests and taking up a commercial development strategy in the power and energy sector. This is not acceptable. Also, that development must be competitive. Prices must be fixed in consultation with the consumers. The consumers must have space to voice their concerns. This cannot be halted with a law or in any manner. But this is exactly how consumers are being made victims.

The minister has said that the increase in power prices will not have much of an impact on public life.

M Shamsul Alam: That is not true at all. There will be both direct and indirect impact. Electricity bills will go up, but more important than that, the price of each and every commodity and service will increase too. This will hike the cost of living for the public. Commodity expenditure will be slashed and so the purchase of commodities and services will fall. That means the government's revenue in the form of tax, VAT, duty will also fall. This will increase the government's budget deficit. The power division does not take this into account.

The government says that even after prices are hiked, subsidy will have to be paid. And in future, power, gas and fuel will have to be bought at the market price.

M Shamsul Alam: So why didn't the government hold a public hearing? The consumers didn't say that they would have to pay subsidy. An independent agency must look into the matter and see how much money is spent in corruption and pilferage and in giving certain persons undue favours and facilities. Why should the people pay for this? Public hearing is a process where the people could raise questions concerning the government's policies, planning and programmes.

In 2022 the BERC Act was amended and the ministry took on the authority upon itself to determine the price of power and fuel. But amending the law does not mean that the BERC Act has been abolished. Legally speaking, the provision for BERC to determine the prices has not been curbed. So the so-called subsidy is artificial. It is not logical or fair.

How far are the rights of consumers ensured in the energy sector?

S Shamsul Alam: The people are deprived from the energy justice to which they are entitled. This cannot continue in such a manner. The government cannot overlook the laws which ensure the energy rights of the people. But the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010 and the BERC Act 2003 were changed, and the consumers rights drawn up. The consumers were deprived of energy justice. If social values and justice are destroyed, there can't be any state or society.

Why was this situation created in the energy sector?

S Shamsul Alam: Massive opportunities for looting have been created in the energy sector. In 2010 the government created scope for power generation in the private sector under the names of rental and quick rental. But creating scope in the private sector entails competition. However, without doing that the government created opportunity for a particular group to invest and they hiked costs as they wished. They have been raking in millions of taka in the name of capacity charge. This law was first drawn up for two years, but was extended to five. It is now heard this will be further extended till 2026. And an impunity clause was put in place so no one could go to the court in this regard. Granting someone with impunity indicates a mystery is afoot.

What is the way to emerge from this prevailing predicament in the energy sector?

S Shamsul Alam: The first question is, from what angle should we view the energy sector? If the government looks at this from a commercial angle, then a handful of people will benefit. And if it is viewed as a service sector, then people will benefit, living standards will improve. The economy will be vibrant. Energy is the driving force of economy. That is why before hiking the price of power, energy or gas, the government should have thought of its impact and consequences.

The government has increased the cost of electricity at a time when the price of each and every commodity has spiralled. People's incomes haven't increased. Now because of the increase in the cost of electricity, the cost of agricultural and industrial goods will also go up. Transport costs will increase. It will become difficult to keep up competition with foreign competitors.

In the seventies it was hard to ensure food for 75 million people, but now we are more or less self-sufficient in food. How was this possible? It was possible because of the government's agriculture-friendly policies. The government provided subsidies in fertiliser, seeds and irrigation. More important than subsidy in the energy sector, is supportive policies and the proper implementation of these policies.

How people-friendly do you think the government's 2016 master plan was in developing the energy sector?

S Shamsul Alam: The 1996 energy policy, the 2010 perspective plan and the 2016 master plan had spoken of competition and supply of power and energy at low costs. When energy costs were low in the international market, the government imported oil and charged the consumer high prices. It made profits. We had spoken about creating a fund to keep power and energy prices stable. We had emphasised the need for local gas exploration and extraction from long ago, but the government paid no heed to our words. Now they are sitting up and taking note. What will happen if the government the government does not move away from its development plans in this sector in business interests?

Can BERC take any decision outside of the government's decision? Even of a public hearing is held, the government can go ahead and hike the price of electricity as it wishes.

S Shamsul Alam: In the past there was no public hearing regarding LPG. Now public hearings are held at the behest of a court order. We have said that this should not be just in the case of LPG. Public hearing should be held through BERC in the determination of the costs of all petroleum products. We argued that the price of oil was low for five years, but there were no adjustments. Now why is there all this talk about adjustment? The government at the time decreased the price of diesel by three taka a litre. Let the government create a price stabilisation fund so if the price of oil goes up, this can be adjusted from the fund. The consumers will not have to bear the pressure.

BERC did not go outside of the government's decision, but there was pressure on both BERC and the government because of the public hearing. They were accountable in court. That is how a regulatory culture can develop.

On one had there is load shedding and, on the other, the rates are rising steadily.

S Shamsul Alam: The main obstacle in the way of power sector development is discrepancies in the government's plans and policies. Instead of upholding public interests, the government is carrying out development though investment without competition and also giving priority to business interests by hiking costs without any public hearing. This has led to a crisis in both the financial and power sectors.

But the government claims that there is extensive development in the power sector.

M Shamsul Alam: There has been no development in the power sector in a real sense. In fact, it is in dire straits. The cost of power supply has been increased unjustly and unfairly. Power generation has even been decreased in order to cut down on subsidies. The reality is that though there is adequate generation, transmission and distribution in comparison to the demand, there is a power crisis because the standard of capacity development is no maintained. This impacts industrial production. Due to the gas crisis, low cost power generation by the government has decreased. Yet that gas is being supplied to the private sector power plants and power is being purchased from there at high costs. Rather than turning to the extraction and use of our own gas and coal, importance is being given to imported coal, LNG and oil-fire power generation. Over all, the developments in the power sector have strategically planned such a manner which is not at all people-friendly. It promotes looting and high costs.

There has been a lot of controversy over rental and quick rental power plants. When will all this come to an end?

M Shamsul Alam: Using the power crisis as an excuse, the government gave many privately owned companies the opportunity to invest in power generation without competition. The concept of rental power plants goes against national interests. The government purchases electricity from these companies at prices much higher than the production costs. They have been given the opportunity to import fuel with 10 per cent service charge, thus giving them oil business alongside the power business. Also, whether they generate power or not, the consumers have to pay their rent. Why is this business still in place? There is no logical or justified answer to this.

The government has said subsidies will go up if prices aren't hiked.

M Shamsul Alam: Through our studies we have shown that the price of electricity can be lessened rather than increased. The power and energy sectors can be made financially and technically self-reliant. The price of oil has gone down in the international market. I see no reason for the price of power to go up. The funds which have accumulated in the various energy-related agencies, along with the gas and power development funds and the energy security fund, can be used to easily attain financial and technical self-reliance in the sector. We have said that the people are being deprived of power and energy at the correct prices, in correct amounts and at correct standards due to corruption and pilferage. If this right is not protected and ensured, then subsidies will continue to increase. It will not be possible to control this by means of price hikes and load shedding. The government is rife with discrepancies in this area.

What is the way out of this predicament?

M Shamsul Alam: Petrobangla was formed after independence with the aims of achieving self-reliance in the energy sector. But the consequent governments made this a dependent organisation. It will not do if the bureaucrats are the one who take the decisions about how the energy or power sectors will run. Let BERC talk to the stakeholders. Let it listen to the power sector too. Ways must be devised to protect the country's resources, to make electricity easily available to the people. We have already said that the country will face disaster if the energy sector is run on recommendations from outside. In the interests of ensuring energy security, the government must discard its business attitude in the sector.

The entire world is now leaning towards renewable energy and power generation. We lag behind in this regard.

M Shamsul Alam: The government's policy is erroneous here too. Many countries like Italy use their rooftops for solar energy generation. Most of the buildings have taken up plans to meet their power demands with solar power. We use the excuse of high costs to shy away from solar power development. There are no considerations about addressing the limitations of the grid regarding solar power. There is no research on wind and solar power generation. It is possible to generate solar and wind power locally, but we have taken all the consumers down the costly and wrong way to the national grid and making them electricity-deprived. Power supply by means of the national grid facilities the stealing and misappropriation of funds. We have increased oil-fired power production by 30 per cent and are paying subsidy. But this subsidy is being withdrawn. The burden will be borne by the people.

What is the government doing to develop the gas sector?

M Shamsul Alam: Millions of taka is being spent in developing gas fields. These funds come from the people. Yet the capacity of the gas fields to supply gas has not been increased. BAPEX has explored the gas fields, but the gas is extracted by foreign companies. BAPEX discovered the gas field in Bhola, but a Russian company has been given the world. There is ample gas in Bhola. Costs would be lower if BAPEX did the extraction. But it is costing more as the task has been given to a foreign company. The manner in which the cost of offshore gas of the foreign companies is being increased in the PSC, there will be a time when it will be said that there is no point in extracting gas. Bhola gas could be used to meet the demands of Khulna and the entire southern region. There would be no need for oil-fired power generation. Khulna's dual fuel power plants don't get either gas or diesel. These don't generate electricity, but increase production costs.

The government is talking about adjusting energy costs. The price of fuel has been reduced nominally. How do you see this?

M Shamsul Alam: The wealthy may benefit somewhat from the slight decrease in the price of octane and petrol. They will save to an extent on fuel costs. The slight decrease in diesel cost will not lead to a decrease in transport fares, agricultural production costs, diesel-fired power generation costs, etc. The price of fuel has been decreased through executive orders and not by means of public hearing. This will only protect the exploitative increase of fuel oil prices, as in the past.