Crippling power crisis persists despite $3,900cr investment

May 06, 2023

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Despite investing $3,900 crore in the power sector between 2009 and 2022, Bangladesh is in the middle of its worst-ever power crisis with one of the world's lowest per capita electricity consumption, just ahead of some conflict-prone African countries such as Mali and the Democratic Republic of Congo.

With the colossal sum of money invested over the past 14 years, which could be used to build about 10 Padma Bridges, Bangladesh has seen about a fivefold increase in its installed electricity generation capacity, now at 24,143 MW, excluding 3,000 MW of captive power, mostly based on imported fossil fuels, also achieving enhanced power distribution and transmission capacities.

But the country cannot use even half of the generation capacity, mainly because it cannot afford fossil energy, not even during a prolonged heatwave severely affecting lives with record-level temperatures.

Over the past six days, Bangladesh has seen its power shortage break record four times though people continued to pay the price demanded by the government for power — over 200 per cent costlier compared with the 2010 price.

Energy experts said that the vast investment, in fact, went into increasing people's sufferings in many ways rather than bringing comfort, pointing out, besides the economic burden, the link between fossil fuel burning and global warming.

‘The government has pushed the people, industries and the environment to the brink of collapse by trying to make the power sector into a profitable business for both itself and private investors,’ said M Shamsul Alam, energy adviser, Consumers Association of Bangladesh.

The power investment has been protected by a controversial indemnity law since 2010 and rewarded by special provisions in power purchase agreements such as capacity charge — a mandatory payment ensuring investors profit regardless of if electricity is generated or not.

Bangladesh has so far paid some $9 billion in capacity charge to private investors while the loss of state-run Power Development Board has exceeded Tk 1 lakh crore. The government has paid over Tk 1 lakh crore in power subsidy since 2010.

‘Capacity charge is illogical and has been invented for transferring public money into private pockets,’ said Hasan Mehedi, member secretary, Bangladesh Working Group on External Debt.

Of the total power sector investment, as estimated by the Power Cell, $29 billion was invested by the government and joint ventures while the private sector invested $10 billion.

Development partners and countries such as Japan, China, India and the USA played significant role in financially and technologically assisting Bangladesh in making the massive fossil fuel investment, according to sources in the Power Cell.

The investment was focused on increasing generation, Power Cell sources said, adding that transmission and distribution only received more investment than generation over the past five to six years.

‘The power sector investment was appropriately used,’ claimed Mohammad Hossain, director general, Power Cell, citing the fivefold increase in the power generation capacity.

The electricity transmission capacity, on the other hand, has almost doubled and the distribution capacity has increased by five times because of this huge investment, he said.

‘The power crisis is due to other related factors,’ said Hossain, referring to the Russia-Ukraine war, high international energy prices and the dollar crisis.

‘We ensured 100 per cent electrification because we had investment,’ he said.

In 2022, the year 100 per cent electrification was achieved, per capita electricity consumption in Bangladesh stood at 498kWh, which was almost double compared with the electricity consumption in 2009, according to Our World in Data.

Still, Bangladesh lagged far behind in per capita electricity consumption which, according to the latest figures provided by Our World in Data, is 1,297kWh in India, 11,576kWh in Bhutan, 751kWh in Sri Lanka, 645kWh in Pakistan and 2,682kWh in Vietnam.

Among the neighboring countries, only Nepal has per capita electricity consumption less than Bangladesh's with 204kWh, slightly ahead of Mali's with 155kWh and Congo's with 115kWh, according to Our World in Data.

Many of the neighboring countries have invested heavily in renewable energy and benefitted during the global energy crisis, particularly during the day.

‘The renewable energy potential has rather been neglected and downplayed so far in Bangladesh,’ said Shahriar Ahmed Chowdhury, director, Centre for Energy Research at United International University.

Once established, renewable energy has no price variability and relieves the government of the need to import fuels using its hard-earned foreign reserve, he said, adding that Bangladesh can easily generate 24,000 MW from renewables by 2041.

Bangladesh currently generates about 500 MW from renewable energy.

An estimate by Ijaz Hossain, former professor at the Bangladesh University of Engineering and Technology, pointed out that Bangladesh could save $1 million every day by replacing 2,000MW worth of fossil fuel with renewable energy.

Bangladesh is battling a crippling dollar crisis that has recently caused the closure of the country's largest power plant — 1,320MW coal-based Payra power plant, worsening the power shortage amidst a severe heatwave.

Bangladesh is trying to ride out the dollar crisis with a three-year-long $4.7 billion loan package from the International Monetary Fund, apparently without much success so far.

At 2:00pm on Thursday, load-shedding peaked at 2,976 MW with the generation of 11,484 MW against the demand for 14,600 MW, according to the Power Grid Company of Bangladesh.

June 7, 6, 5 and 3 witnessed three record power shortages of 3,419 MW, 3,287 MW, 3,215 MW and 3,081 MW at different hours of the days.

Much to the relief of the people, the ongoing heatwave on Thursday substantially retreated with rain in places amid the approaching monsoon and a mild to moderate heatwave sweeping over the division of Rangpur and the districts of Rajshahi, Naogaon, Sirajganj, Netrakona and Sylhet, according to a bulletin of the Bangladesh Meteorological Department.

On the day, the country's highest temperature of 38.6C was recorded in Saidpur.

‘The heatwave is likely to gradually disappear,’ said meteorologist AKM Nazmul Haque.

The heatwave that persisted for almost two weeks along with a crippling power crisis created so much water scarcity in the capital Dhaka that people in areas had to live without a drop of piped water for even a week in places. The heatwave and the lack of water led to dehydration and increased hospital visits of patients with heat-related illnesses.

Meanwhile, a study conducted by the Imperial College of London on a similar heatwave that swept Bangladesh in April said that the heatwave was induced by human activities, adding that Bangladesh can expect such heatwaves in every one year or two.

There are increasing media reports from around the world linking intensified heatwaves with fossil-fuel burning and climate change.

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