The allocation for the power and energy sector in the proposed national budget for the upcoming fiscal year fails to comply with the required allocation for energy sustainability and energy transition in the country, said the Centre for Policy Dialogue (CPD).
“Budget for the power and energy sector needs to be structured from an energy sustainability and energy transition point of view. Without proper planning, allocation, implementation and monitoring both energy sustainability and energy transition will not be achieved,” said CPD Research Director Dr Khondaker Golam Moazzem presenting the main article in a dialogue entitled "Power and Energy Sector in the National Budget FY2025: Challenges and Proposed Measures" organised at the capital’s BRAC Centre on Sunday (23 June).
“Some of the electoral commitments are reflected in the budget, but a number of the commitments are not reflected, like the retirement of rental and inefficient power plants, import of hydropower, smart grid among other things,” he added.
“The budget tries to promote some anti-transition and anti-sustainability measures such as promoting coal, setting unnecessarily ambitious power demand targets, some MTBF targets,” the economist said.
He also commented that major changes should be made in the allocation of the budget by redefining the logical authority in the production, transmission and distribution of gas and electricity to ensure the transformation of the energy sector and sustainable energy sector.
During the presentation of the main article, Golam Moazzem said that the main reason for the current macroeconomic challenges in Bangladesh is the electricity and energy sector.
“Challenges in this sector threaten the stability of the entire economy. To reduce load shedding, keep electricity prices under control, reduce subsidies in this sector and reduce import dependence on fuel, although there is no alternative to domestic gas extraction, the development expenditure of the energy and mineral resources department has been reduced in the proposed budget,” he added.
He also said it would not be possible to fulfil the promise of exploring 46 gas wells by 2025.
Golam Meyazzem termed the initiative to reduce electricity subsidies by increasing the price at the consumer level as unnecessary.
“Electricity subsidy should be reduced. But it is not by increasing the price, but by ensuring efficiency in production,” he added.
The CPD research director said to reduce the capacity charge, a “no electricity no pay” system should be adopted.
He also added that subsidies in this sector will not decrease if fossil fuel-dependent power plants are not cancelled, electricity is bought at higher prices and loans are taken at high interest rates to pay the debt.
“We have the Emergency Power Supply Act. Due to this, electricity is not available at market price as a result of non-competitive bidding. This is happening not only in fossil fuel-based electricity but also in renewable energy power plants," he said, adding that the subsidy in this sector is not decreasing due to the increase in the price of electricity.
Stating there is no more opportunity for investment in setting up seven power plants especially fossil fuel-based power plants in the future, CPD said the power generation capacity in the country has increased to 30,738 MW against the maximum demand of 1,6477 MW during peak hours.
A large part of this additional generation capacity of 14,261 MW will remain redundant even in 2030, the research organisation said.
“Despite the increased production capacity, due to the weakness of transmission and distribution management and the energy crisis, there is a shortfall of up to thousands of megawatts in production per day. This results in frequent load shedding in Mymensingh, Khulna and Cumilla divisions.
Besides increasing the importance of domestic gas exploration and extraction, CPD has urged to increase the use of renewable energy in electricity generation.
Dr Khondaker Golam Moazzem said renewable energy has always been neglected.
“Renewable energy sector faces a discriminatory revenue structure. Investors in the sector should be given at least the same level of access as fossil fuel-based power plants and should be scaled up,” he added.
He recommended increasing the tax holiday for renewable power plants from five years to 10 years, 100% duty waiver on small-scale solar-based projects and reducing the incremental tax rate on solar power-related equipment for the national budget.
Former president of the Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) and member of parliament AK Azad, Director General (DG) of Power Cell Mohammad Hossain, BUET Professor D M Tamim, Bangladesh Power Management Institute Rector Mohammad Alauddin, Consumers Association of Bangladesh (CAB) Energy Advisor Dr Shamsul Alam, honorary professor of Dhaka University and energy expert Badrul Imam among others spoke at the event.
