Electricity crisis and its impact on economic development of Bangladesh:

Budget policy 2012-13 for improvement of this sector.

Dr. Shamsul Islam Latifi Assistant Prof. Department of Economics AUB

Crisis of fuel is dangerous signal whole over the world. To expand the civilization and the life of human is in the hand of power development. The issue of certainty of fuel security is principal issue of all countries and nations. Now a day it is considered that the main source of fuel after oil is gas. Natural gas of Bangladesh is the principal wealth of Bangladesh which fulfills about 75% of commercial issue of this country. Production of electricity, fertilizer industry, and commercial activities and in cooking work of house, the natural gas is contributing enormously. About 40% gas is used for the production of electricity. The number of discovered gas field in the country is about 24. The total stock of gas is about 20,605 trillion cubic feet. At present gas is produced in 79 well of 18 gas field. The production quantity is lower in comparison to demand. On the other hand the demand for gas is increasing in each and every sector regularly. The demand for gas has increased 19.17% in the year 201011 in comparison to 2009-2010. It has been observed that the supply of gas is less in comparison to demand. As a result, crisis of gas supply is increasing gradually. As per record of survey report of petro Bangla the total demand for gas during 2001-2050 will be 62 trillion cubic feet.

Objectives

To explore the process of learning. To share in exchange of views with other participants. To find out the causes of crisis, to point out the issues and to submit suggestions.

Methodology:
Literature review: Newspapers, magazine and journal Personal interview with students, teachers, various sectios of people. Personal suffering due to load-shedding.

Electricity Crisis: The life blood of modern civilization is electricity. The demand for electricity in agriculture, industry, social service sector and day today life is enormous. The availability of electricity against demand is not sufficient. About 48.5% of total population of the county is under the jurisdiction of electrical facility. Due to shortage of electricity the people are suffering and their life is turned upside down. The production of different sector of industries is facing problem. The last 3 years the production of electricity has been increased but it is not sufficient as per demand. As a result the crisis of electricity is increased. According to PDB the demand for electricity is 6,200 M.W per day. On the other hand the production is 5,200 M.W Moreover; the opinion of distributor organizations is that the demand for electricity is 7,300 M.W. So, the gap between demand and supply is 2000 M.W. The terrific deficit of production of natural gas, limitation in raising coal and production of electricity from it and dependence on import of fuel and mineral oil from abroad and huge amount of budget deficit have created such kind of crisis in this sector the demand for fuel and electricity has increased tremendously whole over the world without keeping balance with production.

Sources of electricity production: Coal: The number of discovered mine is five (5). The total stock of
Mineral recourses is 2,700 million ton which is equivalent to 37 trillion cubic feet of gas. Only Bara Pukuria is running at present. About 3,000 Metric ton coal is raised or lifted up per day.

Fuel Oil:

As per opinion of petro Bangla the total stock of fuel oil in the country is about 894 lack Metric ton. This oil field has been discovered in the country. But the function of lifting up has not yet been started. The demand of oil per day is about 45,000 barrel. Bangladesh is importing oil from foreign country and huge amount of foreign currency is spent behind it.

Alternative sources of fuel are as following:

Solar Energy: This system is progressing gradually in this country. The machineries are imported from foreign countries. The light of sun is available in Bangladesh. So solar energy programme may be successful in this country. Electricity from atomic heat: It may be found through establishment of atomic plant. From a small plant huge The alternative sources fuel are as following: quantity of electricity may be produced. More than 20% electricity is produced from atomic power in the world. This source may be blessing for Bangladesh if this plant is successfully established. This programme is very costly, modern and technical. Electricity from wind mill by establishing this kind of center: The production of electricity from this system 30% production has been found in the world. It is dependable, less costly and free from pollution. It is depended on velocity of air and natural situation.

 Biogas Project: The fuel which is made through from rotten material like cow dung, garbage, other different type of rotten material it is known Biogas plant: About 60% to 70% and remaining things are considered as organic matter which may be used for cooking. This system is flexible. It is also used for lighting in different ways (Fan, Generator, TV) to remove crisis of fuel and electricity. The rate of use of fuel is considered as index of crisis of electricity in every sector. As per promise of present Govt. during election that production will be 5000 M.W. within 2011. It may be mentioned that 6th Jan 2009 Electricity production was 3267.5 M.W. Highest quantity of production of electricity on 22 March 2012 was 6065.5 M.W. It may be pointed out that office order was given for 52 plants for 3 years the capacity of each is 5533 M.W. New electricity production was 3380 M.W. from 6th January to till today. Production in Private Sector is 2183 M.W. Production in public sector is 1197 MW and Grand total is 3380 MW.

 The Govt has given the subsidy in last year against the price of electricity which was 4519 crore taka. Price of furnish oil per liter was 26/= in Jan 2009 and now the price is 60/=. So the production cost has increased more than double. New 897 circuit K. M transmission line has been built. Total 10 grid sub centers have been built which total capacity is 1869 MVA. People under the jurisdiction of electricity facility in theYear 2008 was 43%. At Present in 2012 53%Per head electricity production was 210 KWH in 2008 , 265 KW hour in 2012 .Distribution system loss 15.56% in 2008 and 11.88% in 2012. New connection of electricity line from Jan 2009 to April 2012=24.12 lakhs Total connection in June 09 was 108.35 lakhs and 112.24 lakhs in June 09 .It has increased to 119.31 lakhs in June 2010, 123.02 lakhs in June 11 and 132.46 lakhs in April 2012.

Source: Prathom-Alo dated: 01-06-2012

Present plan and programme:

The duration of quick rental power plant centers will be ended by 2012-2015. Additional electricity of 8748 M.W. will be produced within 2012-2015, the programme under process. Steps have been taken to increase the capacity of old power plant through rehabilitation and combined cycling.The Prime minister on 12 June 2012 has given the emphasis to complete the construction of electricity centre quickly which are under construction in the meeting of project implementation. There is criticism against rental quick rental power plant due to higher cost of production. In reply of criticism, the PMs energy Adviser Janab Towfiq Elahi Chowdhury hit out at critics of quick rental power plants and asked them to thank the Govt for increasing power production. The Adviser pointed out that when agreement for plants were singed the price of furnance oil was Tk 26/= per litre, but now it cost Tk 60/= per litre. The daily average power production around 5,500 MW. The Adviser added that present govt has raised the production of gas to around 2100 cft per day which was 1700 mm cft when the Govt took the office. According to Prof. Dr. Mainul Islam there was mistake in the estimation of double system of subsidy in the head of rental and Quick rental power plant for which the present problem has arisen. He also criticized the wrong policy of the Govt regarding fuel and power policy. The CPD opined that the Govt will have to come out from rental and quick rental power plant program as early as possible, but attention must be given to the production and demand situation of the electricity. Under any circumstances, people should not be under the umbrella of dark.

From Budget speech of honorable Finance Minister Power is the main driving force of our Socio-economic development and poverty reduction efforts, Govt has given the highest priority to power and energy sector. By now the Govt has prepared the power sector Master plan (PSMP) 2010. Govt started its implementation agenda by installing new power plants, upgrading transmission and distribution system, diversifying renewable energy sources and identifying ways to ensure economic use of power. Despite all these efforts, due to load-shedding, people in Dhaka and elsewhere have been suffering a great deal. Power generation situation: When present Govt was formed in 2009 the demand for electricity was 5,600 M.W. against which 3,525 M.W. of electricity could be generated at that time there was 33 power plants under both public and private sectors. There were 8,305 km transmission lines 103 sub centers and 226,14 distribution lines. The demand for electricity in the country now stands at 7,518 M.W. and Bangladesh is producing 6,066 M.W. There are 79 power plants under both public and private sectors. How ever, because of accelerated demand, power shortage is being strongly felt. The demand for electricity has gone up substantially. The per capita electricity consumption rate has increased from 220 KWH to 265 KWH. Therefore the Govt has planned to produce 8,294 M.W. of electricity by 2013 in addition to previous target. Agreements have been signed to install 52 power plants both under public and private sectors to achieve this goal. Moreover, installation of 30 power plants having capacity to produce 5600 M.W. of electricity is in progress. These new power plants will come into operation by 2015-16.

 Alternative Sources:
Govt will be able to generate 700-800 M.W. of additional electricity by undertaking BMRE of old gas fired power plants by Feb 2015. In the context of growing demand for power 250 M.W. of electricity will be imported from India by 2013. In addition to this, import of electricity from Myanmar, Nepal and Bhutan is under way. Besides, steps have been taken to construct coal based power plants with a capacity of 2938 M.W. of electricity under joint venture investment by 2016. Govt has also has taken initiatives to produce 5000 M.W. of electricity from nuclear energy by 2030. Moreover, Govt has kept unhindered the process of diversifying energy sources; 70M.W. of electricity has been produced from renewable energy sources under public and private sector. Govt has a plan to produce 500 M.W. of electricity from renewable energy sources by 2020.

The finance Minister has announced that the power and energy sectors will get Tk 9,544 crore, about 5% of the total budgetary allocation during the fiscal year 2012-13of the total allocation, the energy sector will get Tk. 1,648 crore, while the power sector will get Tk. 7,896 crore.

Findings and suggestions:

Demand for electricity has been increasing very rapidly in residence commercial sectors, mill and industry etc. But the supply is unable to cope with demand. Mr. Shahazahan told that there was no electricity for 700 hours during Apri- May 2012 in his New Samanbagh Tea industry. This is why huge quantity of green leave was unable to process for made tea. He added that this year the rainfall was about 31 inches which was favorable to tea leave production.Mr Enayet Hossain, Chairman of Jurivallley said that 34 tea states have been affected due to shortage and want of electricity. Same kind of opinion has expressed by Shafiqur Rahman and Gopal Sikdar of Dhamai tea state that they lost green leave of few lakhs taka. There is want of fare-sighted person in planning and implementation and as a result the fault has taken place. The organizational inefficiency of the BPDB Power Division of Ministry of power, Energy and Mineral Resources (MPEMR) of Bangladesh is the main cause for current electricity crises (Ahmed. Ziauddin) Dec 31, 2011. There is corruption in this department. It is said that meter reader, Engineer, technician are earning a lot in illegal way. The crisis situation has become acute due to inadequate fund, weak governance and above all inefficiency.

Bangladesh Govt has taken several programmes and has adopted policies for privatization and public private partnership. But Govt has not succeeded to mitigate the crisis.

At present Power Division, a part of the Ministry of power energy and Mineral Resources (NPEMR) of Bangladesh controls the electricity supply industry through the power cell (Sarkar et al, 2003). But under the coordination and guidance of the power Division, BPDB, a holding company is solely responsible for generating, transmitting and distributing power through PDB, DESA, DESCO, WZPDCL and REB/PBSs in the country. There is some leakage in co-ordination among the departments.

 State owned Power Grid Company of Bangladesh (PGCB is responsible for transmission only and electricity generation and distribution activities are opened to private, public and foreign investment, although Govt owned bodies are still dominating (Sarkar et al 2003), An autonomous body named Energy Regulatory Commission, that has the authority to issue licenses, ensures compliance with license conditions and set tariffs, was established in 2003 (world Bank 2003).

In Bangladesh Public-private partnership or privatization take place in the case of urgency and emergency rather than increase efficiency of the electricity supply industry (Grat wick and Eber hard, 2008). Independent power producers (IPPS) take part in Bangladesh Govt at the moment when Govt funds are not available and crisis in electricity supply becomes acute (world Bank, 2003, TIB 2007) , Moreover it takes a long process for approval of these IPPS projects due to political influence, corruption and inefficiency. (Lengthy process sets back power projects 2010) .

To encourage the private investment the system and policy should be easier and simple. The procedure should be short. No corruption should exist. Electricity production through Hydrolytic project, wind mill, Bio gas Plant, Solar energy should be encouraged. For small project of electricity the geographical area may be identified separately, local people may be motivated for this work. More and more production of electricity will create more employment and economic development activities will be extended. As per Govt decision black money may be converted into white money. Under this situation we propose that Govt can make policy for investment of this white money into electricity sector.

Reference:

Naya Diganta , dated: 29-05-12. Daynik Ittefaq , dated 29-05-12. Prothom-alo, editorial column, dated 11-06-12. Naya Diganta , dated: 03-06-12. Prothom-alo, dated 01-06-12. The Independent , dated :08- 6-12. The Daily Star, dated: 06-06-12. Fuel cris: electricity and alternative power, Current affairs, 06-06-12. Opinion on Budget, Prof. Dr. Moinul Islam, Prothom-alo , dated: 0506-12. Budget Speech of honorable Finance minister , New Age, 08-06-12. Ahmed Ziauddin, Dec. 2011, Electricity crisis of Bangladesh : result of Organizational inefficiency. Sangbad, dated 13-06-12.