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Most of the special energy funds worth Tk 53,000 crore was misused by the Sheikh Hasina government, ousted in August past year amid a mass uprising, through breaching policies and guidelines during its 15 years of authoritarian regime.

The funds — power sector development fund, gas development fund and energy security fund — were created with money kept aside from gas and electricity sales every month.

Reducing power and energy sector expenses by investing in least-cost power production, natural gas exploration and production and energy efficiency was the main target of creating the funds.

Until June past year, except for the amounts stuck in different stages of transaction and money deducted as tax, the aggregate size of the three funds was Tk 47,700 crore.

Of the amount, 97 per cent was used by the ousted AL government, showed Bangladesh Energy Regulatory Commission data, and about three-fourths of it was spent breaking the policies and guidelines stipulating the use of the funds.

Only Tk 1,500 crore was found with the funds operated by the Bangladesh Power Development Board, Petrobangla and BERC at the end of past financial year.

The use of the funds featured huge imports of liquefied natural gas with 44 per cent of the money or Tk 21,000 crore spent for the purpose. LNG import is blamed for plunging Bangladesh, to a great extent, into the dollar crisis and unprecedented inflation that have been around for over two years.

‘The past government did not care for any rules or laws in conducting its affairs. People never enjoyed the benefits of creating the funds,’ said M Shamasul Alam, energy adviser at the Consumers Association of Bangladesh.

The oldest of the funds, Gas Development Fund, was created on August 1, 2009, immediately after the past government had assumed power and increased the gas price by 11.22 per cent. The fund was created by keeping aside Tk 0.42 from the proceeds of selling a cubic metre of gas.

A good portion of the GDF, which was Tk 20,000 crore, was used for paying tax, though the fund was originally created under the condition of not being taxable.

Highlighting the trend of a rapid depletion in the reserve of gas, accounting for 73 per cent of commercial energy consumption, the GDF policy primarily focused on enhancing natural gas exploration and production.

Exploration projects used Tk 6,800 crore from the fund managed by the Petrobgangla.

In complete violation of the GDF policy, Tk 6,000 crore was taken as loan by the government from the fund for importing LNG.

Petrobangla data showed that past year the import of LNG to meet about a third of the gas demand raised the overall cost of gas by five folds.

Past year Petrobangla bought a unit of gas from state-owned oil companies at Tk 1.5 while the cost of buying the same amount of gas from international oil companies lifting gas from local fields stood at Tk 4.5. The import cost of a unit of LNG, on the other hand, was Tk 62. Imported LNG is blended with local natural gas for supply through the national grid.

‘Spending the GDF for LNG import despite frequent gas price increases was against all logic,’ said Shafiqul Alam, lead energy analyst, Bangladesh at the Institute for Energy Economics and Financial Analysis.

Since the beginning of LNG import in 2018, household consumers have seen their gas bills rise up to 35 per cent while hotels and restaurants have observed a 79 per cent rise in their prices. Industries, however, saw a 179 per cent increase in the gas prices in one go past year. The price hikes were always justified with increased expenses for LNG import.

‘A careful assessment is needed to find out what necessitated the use of the GDF for LNG import,’ said Shafiqul.

Energy experts have long expressed their frustration over the government’s reluctance to explore its own resources, particularly gas reserve, which is believed to be in abundance in the offshore. The reluctance is often linked to strong influence by global fossil fuel lobby, dictating Bangladesh’s power and energy policy over the past two decades.

Petrobangla even transferred Tk 3,000 crore from the GDF to the national exchequer under the controversial special law allowing the government to take away fund sitting idle with state-owned entities. The law, surplus fund act, came into force in 2022 when the past government was battling with a severe economic crisis.

The requirement of taking BERC permission to invest the GDF fund was never fulfilled.

The power sector development fund was created on February 1, 2011 by channelling Tk 0.15 on each unit of bulk electricity sales. The amount that the fund had available for use was Tk 15,700 crore until June past year.

Created with the objective to be invested in low-cost power generation projects, Tk 5,060 crore from the fund was used in five power generation projects, including Tk 1,184 crore going to the project of the coal-based 1,320MW Payra power plant.

A key condition of using the PSDF was that it ensures low-cost power generation. But projects taken under the fund added to the BPDB’s financial burden, particularly due to capacity charge entitlement of the power plants that were not needed in the first place. The past government even could not match the construction of the Payra power plant with required transmission network, keeping it idle for over one year.

The BPDB also took Tk 10,257 crore as loan from the PSDF.

‘Taking loan from the PSDF was the most outrageous move,’ said Shamasul Alam.

‘First, state-owned BPDB took a loan illegally from a fund created with money taken directly from the people’s pocket, and then it passed the responsibility of paying back the loan onto the shoulder of people,’ he observed.

He said that the use of the fund in coal-based power plants went against the spirit that led to the formation of the fund. The fund was primarily meant to be used for gas-based and renewable power generation.

No significant renewable energy investment was made under the PSDF.

Created on September 1, 2015, Tk 15,200 crore was deposited with the energy security fund until June past year. The fund received Tk 0.40 from per cubic metre of gas sales. Almost the entire fund — Tk 15,000 crore — was used for importing LNG on loans.

Established on April 10, 2018, the ESF guidelines said that its main goal was to protect future generation from potential energy crisis arising from using up natural gas reserve. The fund permitted LNG import, but said that it could also be used for the purpose of exploration, extraction, purification, transmission and distribution of natural gas.

The fund, also operated by the Petrobangla, could be used for achieving energy efficiency.

BERC officials said that interests on loans taken from the funds remained largely unpaid, without the authorities even caring to explain their decision of not paying back loans.

‘Energy funds’ administration is a microcosm of how things were done in the power and energy sector during AL’s regime,’ said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development, a platform of green activists.