Private sector wants in on power distribution

Private sector investors want to enter the power transmission and distribution business which is presently controlled by government entities.

The prospective investors say that privatisation of electricity distribution will slash power shortage at industries and reduce harassment of entrepreneurs.     

"We have surplus power generation, but the reality is that businessmen are not happy because there are still issues at the distribution level," said Shams Mahmud, president of the Dhaka Chamber of Commerce & Industry (DCCI).

"A control board needs to be formed over this, but first of all, priority should be given to involving private investors in the distribution system," Shams Mahmud told a press briefing in Dhaka on Monday.     

The Dhaka Chamber also talked about the overall economic environment, including the stock market, exports, banks and financial institutions at the press briefing titled 'DCCI Priorities for 2020'.    

According to the Power Division, the country's power generation capacity has reached 22,000 megawatts against the demand of 12,000 MW. The daily power demand drops below 10,000 MW during the winter.

Although electricity generation is nearly double the demand, industries are not getting an uninterrupted power supply owing to the old and poor transmission and distribution network.

On average, the country's industrial units have two hours of power outage daily. The production facilities have to depend on fuel-run generators during the power cut.      

The Power Division also says that the countrywide transmission loss amounts to 2.74 percent while the distribution loss stands at 8.35 percent. The overall system loss stands at 10.66 percent.

The Bangladesh Power Development Board is responsible for 10.66 percent system loss while the Rural Electrification Board has 9.29 percent system loss.      

Businessmen believe that involving the private sector in distribution and transmission will solve the problem.

At present there are 137 power generation units across the country out of which 71 are run by private entrepreneurs. However, government entities solely control and run the electricity transmission and distribution system.       

The Dhaka Chamber also voiced concern over gas connection and supply. 

The chamber President Shams Mahmud also talked about the banking sector. He said, "The government is borrowing from banks to develop the infrastructure so as to attract foreign investment in Bangladesh. This borrowing will not hurt the private sector because it has the scope to borrow money from abroad."

On default loans, he said, "Many entrepreneurs take loans to set up industries. But they often turn into defaulters after failing to go into production in time owing to power and gas issues."

"Default loans are not a major problem. Many countries including Japan and India have non-performing loans."

The chamber president demanded implementation of a nine percent interest rate on loans. Condemning the recent demand by banks to withhold the nine percent interest rate on loans for small and medium-sized enterprises (SMEs), he said, "I demand that SMEs also get the nine percent interest rate on loans."     

The chamber president put high-hopes on the prime minister's effort to bolster the share market, and said the capital market will return to normal soon.   

He also said that the Dhaka Chamber of Commerce & Industry will step in to develop the bond market policy in 2020 which will ensure long-term capital flow for entrepreneurs, while investors will get five percent profit for putting money into bonds.            

The chamber president also announced giving special attention to 11 points this year. These include diversifying export, manpower development, boosting diplomatic relations for economic benefit, capital market reformation, energy security, fourth industrial revolution, progress on ease of doing business, research and development, infrastructure and SMEs.            

Senior Vice-President NKA Mobin and Vice-President Mohammad Bashiruddin of the Dhaka Chamber, among others, were present at the press briefing.