Prepared by
a Journalist at Dhaka
Power sector reforms need review
Reforms in the power sector have been criticised in many relevant circles. The
draft policy prepared by the Power Cell, ministry of energy and mineral resources
was also debated at the Institution of Engineers’ workshop on 9th July this year. It
critically debated on every aspect of the draft policy statement.
The implementation of power sector reforms has already started with Private
Sector Generation Policy and a few IPP projects in various stages of
implementation. The Power Grid Company of Bangladesh (PGCB) has been
created to take over transmission system of Bangladesh and have started to
function partly.
In the area of distribution, Dhaka Electric Supply Company (DESCO) has been
created for distribution and contracting out commercial functions in some of the
electric supplies.
In July 1998 the World Bank received confirmation of government’s interest in
principle to the use of an International Development Association (IDA) Adaptable
Programme Loan (APL) to support the developments in the power sector over the
next ten years. A World Bank power sector mission visited Dhaka in
February/March, 1999 for the preparation of the APL and to confirm the
commitment of the authorities in Bangladesh to reform the power sector. The
mission was also here to identify the main immediate constraints to reforms and
elaborate possible solutions, to recommend a strategy for implementation of the
power sector reforms, to outline the next steps for preparing the first loan under
the APL and to identify the sector requirements in the ten year development period
covered by the first sub-loan of the APL. The investments required in the next ten
year period have been estimated at US$ 6.6 billion for additional generation and to
reinforce and expand the transmission and distribution networks.
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Prepared by
a Journalist at Dhaka
Actually the main objective of the APL is to support the reform process through
the privatisation of unbundled utilities starting with distribution.
What is the hidden agenda behind introduction of APL and National Load
Dispatch Centre (NLDC) transfer to Power Grid Company of Bangladesh
(PGCB)? It is a hard fact that the Bangladesh Power Development Board (BPDB)
is heavily burdened with the liabilities of DESA and REB. Those foreign partners
who had little contribution to the Board’s development now prescribe to segregate
the whole Board in an abstract and complicated way which cannot be termed as
realistic.
The World Bank (WB) and the Asian Development Bank (ADB) had no
worthwhile contribution in the power sector development programme of
Bangladesh. State to State supplier’s credit, KfW, OECF, Kuwait and Korea
Development Fund have major contribution in power sector development. But
now both the WB and ADB are engaged in the implementation of their so- called
reform process, which they proudly claim will improve the total power sector
scenario.
But experts are against reform process for the following reasons. The part finance
of total requirement demands illogical segregation. Out of US$ 6.6 billion
investment APL may commit $ 600 million with a number of “theoretical and
incongruous conditions” which will be difficult to implement. They may commit
part by part finance in power sector which do not confirm investment in
generation and transmission sides, the most affected sides of the power sector.
But both the WB and ADB are extending financial support in Distribution side of
REB and DESA that increased energy demand but decreased generation safety
margin-thus making the total system more unreliable.
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Prepared by
a Journalist at Dhaka
The WB and ADB targeted distribution as the first inefficient functional side for
reform but they changed their course and now want to reform Transmission and
Generation at the same time. This will make the whole reform process much
difficult to implement, said one technocrat. Without adequate training of all
personnel at all levels, will bring negative result from this concurrent reforms in
all sides of the power sector. And this simultaneous reform process may create
inordinate operational crisis, which will lead to imbalance in the system as a
whole.
Donors whom we in Bangladesh dearly address as development partners are fond
of blaming bureaucracy for being anti-progress and development and main
impediment to global industrialisation. But the donors have amply proved by
introducing APL that they actually “foster bureaucratic spirit”. An expert
considers that APL will make the whole process “Too much lengthy and full of
ambiguities and lead to unrealistic business plan implementation and rigid
functional conditions”. APL also cannot ensure timely finance for power sector.
Segregation of total utility as an expert explained, means more number of services
exposure, “profit-oriented organisation making energy cost high – an antidevelopment scheme for the country”. By segregating the utility service
organisations like Power Development Board a number of profit making
organisations will emerge resulting in escalation of cost per Kwt i.e., energy price
and multidimensional chain reaction in the socio-economic sphere of the country.
The anti-development chain reaction must be taken into serious consideration.
Increase in energy cost will increase production cost and price of the product and
squeeze the overall market size leading to fast rise in unemployment rate.
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Prepared by
a Journalist at Dhaka
Economists say increase in unemployment rate construes decrease in GDP, fall in
export and exhaustion of foreign exchange reserve. The chain reaction will compel
the government to devalue the currency, push inflation up to the extent that will
have an adverse impact on the national economy. This will also affect all industrial
sectors and especially cause major destruction to garments, textile, tannery and
service-oriented industries. And this cumulative destruction will increase the level
of poverty.
Power sector reforms is not only a vital issue, but sensitive and delicate too. It is
not a trifling matter because on it hinges development, expansion and operation of
all sectors. Therefore the policymakers should not be in a hurry to push in the
reforms or enter into accords with foreign agencies. Some vital questions must be
dispassionately considered: what sort of reforms are needed? What is the present
working environment? Do we have enough manpower to make effective
adjustments with the change? How other developing countries are introducing
changes and in what ways? How the reform process will bring dividends to users
and the State as a whole? The policy makers must give convincing replies to the
queries as these are basic questions as follow as major changes in the power sector
is concerned.
The proposed transfer of National Load Dispatch Centre (NLDC) and
Transmission to different authorities has been questioned by many. Change in
distribution system would equally affect the management of the power sector.
Transferring NLDC and Transmission to different authority will increase
operational cost by Taka 100 crore. It will increase energy consumption cost for
consumers which will also increase production and product cost.
Transmission of power connected with optical communication channel has great
significance in the broad perspective of protecting national security. It may be
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Prepared by
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recalled that in May 1999 NATO selected power system as the strategic and
tactical targets for air attack in Kosovo. In May 1998 Army took over the
operational supervisory control of power system in Pakistan followed by the
atomic explosion in India. Iraq has also deployed its army to supervise national
power sector project implementation works. Transmission and NLDC transfer to
other authority without addressing functional responsibility would jeopardise
national security in future.
NLDC is the central controlling authority of existing total power system. This
centre schedules what types of generating units may go into operation for how
much time at what load. If the Centre is transferred to other authority which has no
share and authority on power plants, will indeed complicate the total operational
system Generation side is the pivot of the total system. NLDC should therefore
operate under the same authority that is responsible for generation.
Only sixteen per cent of total population have now access to electricity. Hence the
government should not incur additional Taka 100 (hundred) crore annually for
transmission side without any benefit to the national economy. Therefore,
generation, NLDC, operation and transmission are inter-related and inter-twined.
The distribution sector reform should be addressed first. For operation and
maintenance of 3075 km transmission lines, creation of a new company for the
sake of unbundling will be a frivolous exercise. The Power Development Board
has both efficient manpower with requisite expertise and tools for maintaining the
system.
Generation and transmission in the power sector should work as one entity
including development and operation of NLDC. Power sector planning, as one
technocrat of wide experience said, can be efficiently handled by the Power
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Prepared by
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Development Board and is in a coveted position due to trained manpower and
tools to carry out the needed technical works.
The country cannot afford to go for ambitious exercise by adopting APL and
NLDC transfer to PGCB. What is needed on priority basis is BMRE of existing
power stations and other structural changes. Transfer of NLDC and transmission
to private sector according to a technocrat tantamount to privatising national
security.
The policy makers and the political leadership must not take any hasty decision in
adopting APL and the conditionalities attached as these amount to encroachment
on the authority of state power. Experts in the power sector must be vocal in this
regard and acquaint the people of the hidden agenda in the name of power sector
reforms.
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