The Bangladesh Power Development Board (BPDB) should not start the operation of any new power plant before 2025 in order to control overcapacity, said the Centre for Policy Dialogue on Sunday.
At a virtual dialogue, the policy think tank also advised the lone state-owned buyer of electricity to focus on exiting from quick rental and rental power plants.
The speakers at the programme said the success of the power sector needs a new narrative, which should focus on efficiency, better pricing, low carbon emission, and improvement in transmission and distribution.
In his budget speech for the fiscal 2021-22 on 3 June, Finance Minister AHM Mustafa Kamal said 38 power plants with a capacity of 14,115MW are under construction.
He said some of those would come into operation at the end of this year and next year.
Presenting the keynote at the virtual dialogue, CPD's Research Director Dr Khondaker Golam Moazzem said the BPDB had been the highest recipient of cash loan from the government over the past nine years because of its overemphasis on power generation in the private sector.
This caused almost half of the electricity to remain unused, he said.
"Such overcapacity in the private sector has become a huge financial burden for the BPDB as it paid as high as Tk1,500 per unit electricity although the average cost was Tk7 in the fiscal 2019-20," he said.
Moazzem said the FY22 budget has special importance in the context of changing national and global perspectives through phasing out coal and other fossil fuel-based power generation and promoting renewable energy.
Unfortunately, the proposed budget for the power sector did not reflect key policy reform issues, such as shifting from coal and LNG, phasing out quick rentals, and promoting renewable energy-based power generation, he said.
Rather, the budget focused on traditional areas, mostly in power generation and partly in transmission and distribution areas, he added.
CPD Chairman Professor Rehman Sobhan questioned why many power plants that should have been phased out by now are still operating.
He said how much of the excess capacity had resulted in distribution failure should be identified.
Mohammad Hossain, director general of the Power Cell, said every country has a capacity margin as per its domestic condition.
"We are trying to be more economical in having overcapacity. The percentage of overcapacity will drop if we can bring captive power users under the national grid."
He said the government is committed to reducing carbon emission and there are efforts to phase out coal energy while quick rental power plants will be gradually phased out as well.
Dr Mohammad Tamim, former special assistant to the chief adviser to the caretaker government, said the excess capacity of energy generation exists on paper only and not in reality.
"At present, I think our overcapacity will not be more than 20%. Our actual production capacity is around 18,000MW, apart from some old power plants with 1,500-2,000MW capacity that should have been phased out.
"But overcapacity could be high in the future. Our demand projection has to be set carefully," he said.
He further said expanding the national grid to all areas is a wrong decision because it is not financially viable.
For political mileage, it could be 95% and the rest of the areas could be powered with renewable energy, he added.
Imran Karim, president of the Bangladesh Independent Power Producers' Association, agreed with him and said Bangladesh should have the capacity to toggle between various fuels to reduce energy generation costs.
Asif Ashraf, director of the Bangladesh Garment Manufacturers and Exporters Association and managing director of Urmi Group, called for giving tax incentives to businesses that generate solar energy.
Dr Fahmida Khatun, executive director at the CPD who chaired the dialogue, said uninterrupted power supply is crucial as industrial efficiency would otherwise be hampered.
She said the CPD would continue to advocate for green growth and clean energy initiatives taking into account Bangladesh's long-term commitments.
Executive Director and CEO of Infrastructure Development Company Limited Mahmood Malik and President of the Solar Mini-Grid Association DM Majibor Rahman were present at the event among others.