The government in the last one decade has done a really great job in the country’s power sector that saw a three to four times growth in electricity generation. More and more homes are now lit at night.
The government has an installed power generation capacity of 18,000 megawatt, while its highest supply was about 13,000MW. Some 93 percent population can now just switch on their lights.
The power outages that had plagued the nation for more than two decades are almost a matter of history.
But to achieve this level of power generation, the government and the private sector had to invest great amounts of money by taking loans.
Ideally, we should not worry about the loans – as each kilowatt power brings back huge economic returns. As we get electricity, we invest in factories – among other things – and export our products and in return we earn extra dollars. This, in return, pays back the loans the government took for the power sector.
For decades, private investors have lamented a lack of adequate reliable power supply. Load shedding and lack of power supply had long remained a basic obstacle to growth of the private sector as well as the nation.
But wait. The private sector is not investing in the last two years as was expected. And it is not because they do not want to – but because of a host of problems in the financial sector.
According to the Centre for Policy Dialogue, bank credits for investment in the private sector have fallen by a third in the last one year.
The reason is liquidity crisis and discrepancies in interest rates between banks and government savings tools, rising default loans and the fall in bank deposits.
The CPD apprehends decreasing investments might have a big negative impact on industrial growth and employment generation in the country.
If this continues to happen, this will contribute to lower export growth and lower earning. That means, many new power plants will become irrelevant – and a financial burden. Because all power plants need customers to recover their investments and make profit.
Meanwhile, the government has not stopped the speed-wagon of rolling out more power generation and distribution projects.
Currently 53 power plants are being constructed with a capacity to generate 14,202MW. These include mega projects like the 2400MW Rooppur nuclear power plant, the 1200MW Matarbari coal power plant and the 1300MW Rampal coal power plant.
Consider the level of investments: the Rooppur project costs around $13 billion, the Matarbari $4.5 billion and Rampal $1.8 billion. If one totals the cost of these projects, they would exceed $40 billion.
The government targets to generate 24,000MW by 2021, 40,000MW by 2030, and 60,000MW by 2041.
Besides, to ensure energy security by diversifying primary source of energy the government is importing liquefied natural gas worth billions of dollars a year now. Plus, the government starts importing coal worth hundreds of millions of dollars a year from later this year.
None of these would be a problem if the government can ensure that the power and energy supplies are purchased by people and utilised in increasing productivity and increase export earnings. But if that is not happening, the country would land in a deep financial mess. The success in the power sector would then become a burden.