The government in the last one decade has really done a great job in the country’s power sector, with power generation growing three to four times and a significant rise in electricity reaching homes across the country.
According to the finance minister, power generation capacity is now 21,000 megawatts (but actual generation is around 12,000) and 93 percent of the population now have access to power.
The power outages that had plagued the nation for more than two decades is now almost a matter of history.
But to achieve this level of power generation, the government and the private sector had to invest huge amounts of money that came from 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, through which we earn extra dollars. This, in return, helps pay back the loans the government took for the power sector.
For decades, private investors have lamented the lack of adequate reliable power supply. Load shedding and lack of power supply had for long been a fundamental obstacle to growth of the private sector, as well as the nation.
Now the situation has changed. We now have little load shedding.
But wait. The private sector is not investing as was expected. And it’s 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 credit for investment in the private sector has 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.
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.
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 capacity to generate 14,202 megawatts. These include mega projects like the 2400 mw Rooppur nuclear power, the 1200 mw Matarbari coal power and the 1300 mw Rampal coal power projects.
The government aims to generate 24,000 megawatts by 2021, 40,000 megawatts by 2030, and 60,000 megawatts by 2041, respectively.
Besides, to ensure energy security by diversifying primary sources of energy, the government is importing liquefied natural gas worth billions of dollars a year now.
None of these would have been a problem if the government can ensure that power and energy supplies are purchased by people and utilized in increasing productivity and increase export earnings. But if that is not happening, the country will land in a deep financial mess. The success in power sector would then become a burden.