Great Expectations but Timid Implementation
Sharier Khan provides the definitive account of the current power crisis
The Awami League came to power making a raft of specific promises. But, of them, the party's promises on power and energy appeared to be well calculated. Some had called these plans over-ambitious, while others felt that the country really needed big dreams to go to the next level of development.
Upon assuming power, the first year saw further elaboration of the Awami League's promises on energy -- thus raising the nation's hopes and expectations. The government laid out a plan to install roughly 9,000 megawatts of power -- a good part of it would be coal-fired, a part of it nuclear powered, some gas-fired, and some by both gas and petroleum products. These initiatives demand more than $12 billion of investment.
This is the first time the government laid out a plan for building power plants which are not entirely based on natural gas -- which had so far fuelled more than 90 per cent of the power plants of the country. Due to the lack of development in the gas sector in the last decade, the country is now facing an acute gas crisis. This crisis is not going to be resolved soon, as finding and developing new gas fields is dependent on costly exploration activities, luck, and other time-consuming efforts.
This is why the government has eyed several large-scale coal-based power plants totaling more than 3,500 MW. At the same time it has planned for two 1,000 MW nuclear power plants. These are in addition to the implementation of some gas-based and dual fuel-based power projects. The government has even thought of installing a Liquefied Natural Gas (LNG) terminal in Chittagong at a cost of $1 billion to facilitate import of bottled gas so that the existing gas-fired power and industrial units could continue to operate without hindrance in the future.
At the same time, the government has also taken initiatives to connect Bangladesh's power grid to the Indian grid with the aim of having energy security in the long-term through regional co-operation. Once Bangladesh establishes such connectivity, implementing large-scale hydro-power projects in eastern India would become more viable.
While these large plants are installed, the government had even planned for some short-term rental power projects to minimise the interim power crisis. To help ensure investment, most of the large power projects would be implemented under public-private partnership.
Plus the government has also focused on popularising solar power and conservation of power and has taken up a number of successful and unsuccessful measures to conserve energy. All of it shows that the government has been thinking a lot about how to improve the country's energy security.
The government is now 14 months old and 14 months is not long enough to produce enough electricity to eliminate the 2,000 MW load-shedding of this summer.
Nevertheless, 14 months was long enough to demonstrate the government's powers of implementation. Unfortunately, as it has turned out, the government's implementation skills have proven to be pathetic. The prime minister herself at a meeting in early April expressed her unhappiness about the implementation of power projects.
Since 2009, different government agencies floated tenders for power projects totaling more than 3,000 MW. If the agencies could handle these bids efficiently, by now the majority of these projects would have been awarded to different contractors and it would have assured that at least by 2011, some of these projects would have started producing power. That would have meant that by 2011, the level of load-shedding would have decreased significantly -- if not completely.
But that is not happening because so far the government could sign only two public sector power projects of 300 MW each and four rental power projects of 300 MW each. And the government's plans to urgently increase power generation by this summer have failed miserably.
The power ministry has now resorted to unsolicited deals and contracts with competent international rental power companies. If this on-going initiative is reasonably successful, these unsolicited deals may add another 200 to 600 MW power within the year.
Of the remaining two dozen plus power tenders, six power projects totaling 1,400 MW could not make much progress although they were floated about a year back. One for 300 MW is now set for a re-tender. Officials now say that the remaining projects will make headway soon, but analysts say the government will take the whole year simply to complete the tendering processes.
Of the remaining projects, the PDB's bid for ten public sector power projects totaling 810 MW capacity was partially successful as the government is set to sign contracts for seven out of these ten projects -- assuring the generation of 500 MW within the next 30 months.
Besides these, the PDB has floated tenders for five private power projects totaling a maximum of 1,275 megawatts. The initial response for the projects was very encouraging.
While so many projects are being floated by different government agencies, the power scenario has turned from bad to worse. The load-shedding situation is affecting everyone hard as the power supply is now being disrupted in alternate hours and even late at night.
Industrial production has also been affected. The power crisis has become a serious political issue for the government. Whereas the people in 2009 were forgiving about the government not being able to supply adequate power, they are no longer so forgiving this time around. After all, the government is now 14 months old.
Top officials of the power board and the ministry admit disappointing progress with some power projects. But they claim the nation will see a series of power agreements soon. In the next one month, a top official of PDB says, the government will sign different agreements totaling 1,000 MW power capacity. By the end of this year, more power deals totaling more than 4,000 MW would be signed as well.
If that happens, it would surely be a huge achievement for a country like Bangladesh that now produces 4,000 to 4,600 MW power against a demand of 6,000 MW to 6,200 MW.
One official I spoke with for this story explained why some tenders could not make progress as was expected. "Firstly, we produce only 4,000-4,500 MW power, but we have four different agencies floating power tenders. Except for the PDB, all other agencies lack expertise and experience to deal with tenders.
"The creation of so many agencies for power generation was a wrong idea and assigning them to float tenders was an even worse idea," said the official. "You can see that only the tenders floated by the PDB have made some progress. Other agencies are far behind with their tenders."
Agencies like the Power Cell, Electricity Generation Company of Bangladesh (EGCB) and North West Power Generation Company Ltd (NWPGC) also appear to be submissive to pressure from various business lobbies, he says.
It is alleged that the tenders floated by these agencies are being delayed mainly because of pressure from the lobbies, which want the agencies to award the contracts to companies that they represent -- although they are not qualified for the jobs.
"Finally, the donors also play a confusing role. If we involve donors like the World Bank or Asian Development Bank, you would expect them to guide us through the tenders smoothly. In reality, they impose various conditions and create confusion that bogs down the tender processes," the official confided.
Right now, most of the power tenders are being handled by the PDB and the prime minister has given all out support to the agency to speed up the tender process. One such measure is giving legal coverage to the PDB to sign emergency power deals based on unsolicited negotiations.
The PDB has meanwhile floated tender to build a 40 km power transmission line and a high voltage sub-station on the south-western border of the country that would enable power transmission from India. The $150 million tender would allow the PDB to import 250 to 500 MW power after this system is set up within two years. The PDB hopes to complete the tender process within August-September.
The PDB has also initiated the process to set up a 1,350 MW coal-fired power-plant with Indian national power company NTPC in Mongla and another 1,350 MW plant in Chittagong with the private sector. To make these projects successful, the government is carrying out a feasibility study which should be completed by July-August. After this the PDB would float the tender for the Chittagong plant and finalise deal with the NTPC for the Mongla plant -- all within this year.
Finally, the government aims at signing a nuclear power deal with Russia -- with whom the government last year signed a memorandum of understanding on the same issue -- during an upcoming visit by the prime minister to Russia. If this deal is signed, Russia would finance and build a 2,000 MW nuclear power plant at Rooppur. However this deal is still uncertain.
If these deals can be ensured (minus the nuclear power deal), the government may be able to keep its political promise to eliminate load-shedding by the year 2014. If not, the ruling party will pay dearly in the next election.
The year 2010 is a vital year for the Awami League government to prove that it does not just make promises, but that it can it deliver on them
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