The government which has spent a major portion of the budgetary subsidy on the import of fuel oil to general electricity has failed to improve the chronic power crisis in the outgoing financial year, officials and experts said.
A finance ministry estimate shows that the amount of budgetary assistance to the state-owned oil importer and distributor Bangladesh Petroleum Corporation will account for about Tk 100 billion, or a fourth of the total subsidy, in the financial year.
Almost the entire amount of the BPC subsidy has been spent on power generation at furnace oil-fired small power plants, the corporation’s chairman Abu Bakar Siddique said.
He told New Age that 2.8 million tonnes of diesel and furnace oil, out of the 5.8 million tonnes imported, would be used in rental power plants. The BPC incurred a huge loss in selling the oils at subsidised rate.
Experts said the power crisis had worsened in the current summer compared with the extent it did last summer. The costly rental power policy that the government followed has, moreover, increased the financial burden, they said.
Frequent power outages have not only strained the people’s lives in hot, humid weather, it has also hit manufacturing sector, which had 9 per cent growth in the outgoing financial year compared with the 9.5 per cent it had registered in the financial year before.
The Bangladesh Bureau of Statistics which calculated the provisional GDP growth at 6.3 per cent blamed power crisis as being the major reason for the lower-than-expected GDP growth, officials said.
The government has also provided more than Tk 50 billion in subsidy for the Power Development Board and Tk 45 billion for the agricultural sector as the total subsidy bill crossed Tk 400 billion from projected Tk 172.91 billion in 2011–12.
It was under tremendous pressure throughout the financial year to maintain the subsidy and it finally decided to pass subsidy bill on about Tk 100 billion in the next budget because of fund shortage.
The finance minister, Anul Maal Abdul Muhith told the parliament in April that subsidy amounting to 1.1 per cent of the GDP would be given in the next financial year. He said that demand for subsidy has increased, putting the economy under pressure.
Experts criticised the wrong policy on increase in power generation from expensive fuel oil-fired rental power plants by the government.
Mohammad Shamsul Alam, who teaches at Chittagong University of Technology, told a seminar in the capital in April that the people but a few under the ‘VIP’ power distribution coverage were facing power outage for a half of the time.
But people are forced to pay more and more for power as the government inclined towards expensive quick rental power to meet the demand in a short time.
The government entertained expensive private-sector power generation, including quick rental ventures. and ignored low-cost public-sector ways to increase power generation.
‘During the government’s tenure, low-cost power generation in the public sector has decreased by 20 per cent while the procurement of high-cost rental power has increased by 150 per cent,’ he said.
Zaid Bakth, a senior executive at the Bangladesh Institute of Development Studies, said that the experience of fuel oil-fired power plants was not good. The country should get rid of it.