Load shedding to persist for months, even a year: CPD

Load shedding, which has already been plaguing households, businesses, and industrial and commercial activities, is expected to persist for months and possibly even up to a year, the Center for Policy Dialogue (CPD) said at an event on Thursday.

The think tank further said that the country's power and energy sectors are unlikely to see any positive developments in the near future.

During a keynote presentation titled "Challenges in the Energy and Power Sector: Can the Proposed National Budget Address Those Challenges?" at a Dhaka hotel, CPD's Research Director Khondaker Golam Moazzem criticised the government's emphasis on import-based power generation capacity instead of focusing on the development of the domestic gas and renewable energy sectors.

Earlier this month, the country experienced severe load shedding of up to 3,400MW due to a fuel shortage, exacerbated by the summer heatwave. Several major power plants had to halt electricity generation due to authorities' inability to import a sufficient fuel supply.

He expressed concern that this reliance on import-based fuels such as liquefied national gas (LNG), coal, and furnace oil would lead to further depletion of foreign exchange reserves. He also highlighted that the high cost of electricity is unlikely to decrease in the near future and may persist for several more years.  

Moazzem emphasised that the power and energy sectors in Bangladesh are moving in the wrong direction in terms of sustainability.

He said that the financial condition of the Bangladesh Power Development Board (BPDB) is getting worse over the years, as operating losses have increased from Tk6200 crore in FY18 to Tk27,477 crore in FY22.

BPDB's financial loss is largely due to the increasing requirement for capacity payments to the Independent Power Producers (IPPs), rental, and quick rental power plants, which have been met by the government subsidy. In FY17, the subsidy was only Tk5,376 crore, which is now expected to be Tk28,000 crore in FY23.

In the keynote, he also said that the IMF condition for subsidy management through price adjustment will pass the burden on to consumers further instead of solving the problem. In order to get rid of the subsidy burden, he suggested a gradual phase-out of capacity payments.

Analysing the allocation in the proposed budget for this sector, the CPD's research director noted that the government has not allotted money to meet the gas exploration target it set, nor has it kept the required allocation for the renewable energy sector either.

He further highlighted that the power sector, already burdened with a significant excess reserve of about 50%, will face further challenges in handling capacity payments, subsidy requirements, and overall financial sustainability.

Addressing the government's initiative to adjust fuel prices through a market-based pricing model, Moazzem expressed that doing so without setting a base level price would be difficult under current circumstances, particularly for petroleum.

During a panel discussion, Senior Vice Chairman of the Consumers Association of Bangladesh (CAB) Professor M Shamsul Alam said that the power and energy sectors of the country have become an import market for Adani's power, cross-border transmission lines, coal, and LNG.

"Consumers have been paying a high price, and big budgets are being formed with that price. But there is nothing for the consumers," said M Shamsul Alam.

He also called upon the CPD to conduct research on how much money has been laundered in the name of foreign direct investment in the power and energy sectors.

Mostofa Azad Chowdhury Babu, senior vice president of the Federation of Bangladesh Chambers of Commerce and Industry, said that the industrial sector has seen an expansion following the government's power generation capacity development.

"But the industrialists are now in the dark as they are getting no electricity, which is very expensive. So, energy availability should be the main target right now," he added.

He said businessmen cannot open letters of credit due to a dollar shortage that the central bank is holding to show the required reserves. But if the government wants to really boost its foreign currency reserves, it needs to patronise industrial exports.

Badrul Imam, an honorary geology professor at the University of Dhaka, believes that the current energy crisis has been deliberately created.

"The main support in the country's energy sector comes from gas. This crisis would not have been faced if gas exploration work could have been carried out," he added.

Energy expert Professor Ijaz Hossain underscored that while primary energy sources like gas, oil, and coal are major contributors to the current crisis, the proposed budget has allocated less funding to the energy sector.

He criticised the government for neglecting the energy sector, stating that it failed to learn from past and ongoing crises.

"Power plants have been built one by one without ensuring energy supply, which should be illegal under any law," he said.

"Last year, the government announced it would increase gas exploration in the face of an energy import crisis over its volatile price. But once again, it is inclining to import as oil, gas, and LNG prices are decreasing," he added.