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Electricity Crisis

Oil-based power production main concern: M Tamim

  • Staff Correspondent
  • 25 July, 2022 12:00 AM
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Oil-based power production main concern: M Tamim

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The electricity crisis has been caused by over-dependency on imported fuel oil for power generation, energy expert Prof M Tamim said on Sunday.

“We are still depending on oil-based power generation, where the problem actually lies,” he told a dialogue of the Centre for Policy Dialogue (CPD) on the current economic crisis.

M Tamim said the government had deals with oil-based power plants for 3 to 5 years, but even after 12 years, 3500 MW of electricity is being purchased from oil-run power plants which has created an economic burden.

Other means of power production—gas, coal and renewable energy—have not been explored that much and the politicians have failed to show the courage and invest in domestic energy sources, he said.

The problem started in 2000 when the country took a stance against foreign investment in energy exploration and adopted BAPEX only policy, he added.

Even though the policy was adopted, the successive governments have not made enough investment in BAPEX due to financial risk, while there was a lack of courage in local coal exploration due to environmental concerns, he pointed out.

Petrobangla should have tried to enhance the production of gas from existing wells much earlier, he observed.

The former energy adviser to the last caretaker government also warned that the government’s gas import-based electricity generation plan might face a setback as Europe is searching for alternative sources for gas supply after the Russia-Ukraine war.

At the CPD dialogue, the renowned economists have called for mid and long-term steps alongside immediate measures as the crisis may linger.

They also urged the government to look at whether capital flight is taking place through high imports because under-invoicing and over-invoicing are the main sources of money laundering.

“The crisis is not short-term. The impact of the crisis may continue in the medium and long term. Steps should be taken based on the problems,” CPD executive director Dr Fahmida Khatun stated, also calling for institutional reforms.

She also suggested stopping the wastage of money and deferring the projects and expenditures which are not very important at this moment.

Former economic adviser to the last caretaker government Dr AB Mirza Aziz thinks that the policymakers have to think about the trade-off of any move because any move can affect others.

He cited that the banking sector’s situation is deplorable now and the government should not have put a cap on the interest rate, which he said, has squeezed credit flow to the private sector.

“International price hike was the main factor behind the spike in imports; not the quantity,” he said. He suggested checking out whether these are genuine imports.

Citing growing poverty and inequality after the covid and war crisis, the noted economist suggested job creation and widening of the social safety net.

“Now, the economy is under tremendous challenge, which needs to be addressed courageously. And at the same time, people have to make some sacrifice,” he stated.

Mirza Aziz said incentive is not enough to increase the inflow of remittance. It needs manpower export market diversification and skilled manpower export to recover from the foreign exchange deficit.

For Bangladesh Bank governor Dr Salehuddin Ahmed observed that Bangladesh's economy has the symptoms of Sri Lanka and the important issue of governance has been put on reverse gear.

He alleged that the central bank’s decisions are controlled by the interests of a “vested group.”

Executive Chairman of PPRC Dr Hossain Zillur Rahman said: “Bangladesh has gone through a sluggish and disruptive corona recovery that has created a reality of injustice in the country.”

The creation of a new group of poor is a reversal risk of SDG's achievement in terms of nutrition, secondary education and economic policy. Fault lines are now visible, he noted. 

He remarked that the injustice won’t go if the tax administration is not reformed.

The economist noted that the country’s politico-economic governance has been stuck in an “Iron Triangle”—one-dimensional development philosophy, conflict of interest driven economic governance and the regular people are bearing the burden of injustice.

CPD distinguished fellow Prof Mustfizur Rahman and vice-president FBCCI Mostafa Azad Chowdhury spoke on the present economic situation.

Khondaker Golam Moazzem, research director of CPD, moderated the discussion meeting.