THE government’s plan for the highest amount of subsidy allocation for the energy sector in the 2024–25 financial year, defying public opinions for improved support for education, health, and agricultural sectors, is worrying. Financial Division officials say that the energy sector subsidy will be around Tk 35,000 crore in the financial year, double the amount allocated in the 2022–23 financial year, and a large part of the amount would go to idle power plants in capacity payment. Many power plants remain idle but are paid the capacity charge that rental and independent power producers receive from the government whether they produce power or not. In 2022–23, idle power plants increased power sector expenses by 29 per cent with Tk 17,621 crore spent on capacity charge. Since 2009, the government has paid Tk 1,040 billion to 82 independent power producers and 32 rental power plants in capacity charge, as the minister of state for power, energy and mineral resources said in parliament in September 2023. In 2020–2021, as a report of the Bangladesh Working Group on External Debt says, the power board’s financial capacity declined at a 17 per cent rate annually while income of private power companies from capacity payment increased by 19 per cent annually.
When the government is expected to revisit its power policies and review agreements with private-sector producers, the plan to continue subsidising the sector is but a ploy to put public money into private pockets. In the national budget for the forthcoming financial year, there are growing demands from civic groups that the government should increase allocations for education, health and agriculture and expand the reach of social safety net, but Finance Division officials report a possible Tk 6,000 crore subsidy for food. The International Monetary Fund, which has lent $4.7 billion to overcome the shortfall in foreign exchange reserve, also seeks rationalising subsidy on the energy sector so that the government can increase allocation for education and health, but the government remains nonchalant about the burden of capacity payment on the economy. What is more disturbing is that the highly subsidised sector has not been able to ensure a stable access to power for people. In recent weeks, as the country was gripped by a severe heat wave, people reported a prolonged period of power outage. Experts blame disproportionate power generation capacity growth amid slow industrialisation, inadequate investment in power transmission and distribution capacity and power sector inefficiencies for the situation. Studies have showed the problematic nature of power plant contracts, which incentivise high-cost private rental power plants to produce less and maximise their profits.
It is high time that the government revisited its power policy, adopted a ‘no power, no pay’ clause in power purchase agreements and phased out dysfunctional power plants. The government must do away with all the ills to save the power sector and people.
