Experts recommend rental, quick rental power be phased out

The national demand for electricity is not growing with increasing supply. This is due to slow-paced industrialisation and construction of 100 economic zones as well as a lack of development of power dependent transport systems like the metro rail.

The economic disruption due to Covid-19 may further shrink industrialisation in the country – which may widen the gap between supply and demand.

Considering all these, noted economists and experts have recommended, at a webinar, that the government gradually phase out rental and quick rental power and not renew agreements for them any longer.

The Dhaka School of Economics – an undergraduate and postgraduate institution of University of Dhaka – arranged a webinar on the "Power and Energy Sector in the Proposed Budget for FY2020-21" on Saturday. Dr AKM Nazrul Islam, Associate professor of Dhaka School of Economics, moderated the webinar.

The Business Standard was the media partner of the event.

Shafiqul Alam, a former graduate of Dhaka School of Economics, and senior advisor of the German International Cooperation (GIZ) Bangladesh, presented the keynote at the webinar and highlighted four challenges for the power sector.

He said the capacity charge, reliability issues and a lower distribution capacity remain major challenges for the power sector with surplus electricity.

According to the keynote, some 16,000-megawatt (MW) power plants are in the pipeline which will increase the capacity and help to achieve the target of installation capacity of 80,000MW by 2041.

Shafiqul Alam said more than 54 percent of total electricity is being produced from natural gas while only three percent is from renewable energy. The country is not on track to produce 10 percent of power using renewable energy by 2020.

"The cost of renewable energy is lower than that of fossil fuels. Renewable energy can ensure triple employment with the same investment for fossil fuels. The sector has created 1.3-1.4 lakh [positions] of employment," said Shafiqul Alam, recommending exploring opportunities to boost the renewable energy use for power generation.

Dr Qazi Kholiquzzaman Ahmad, chairman of the Dhaka School of Economics, recommended introducing a well-managed and comprehensive work plan to ensure sustainable and reliable power supply to maintain sustainable economic growth.

He called for thinking about protecting the environment and arable lands before industrialisation and power production.

Dr Md Ziaur Rahman Khan, professor at the electrical and electronic engineering department of Bangladesh University of Engineering and Technology, said electricity generation increased in Bangladesh so rapidly that its transmission and distribution is not possible because the power lines require land.

He recommended stopping some quick rentals immediately and discontinuing others gradually.

Abdul Haque, director of the Federation of Bangladesh Chambers of Commerce and Industry, said quick rental leads to an increase in electricity prices, and the government imposes the responsibility on the people and businesses.

He added that higher prices of electricity are reducing entrepreneurs' competitiveness.

Experts also expressed their concern over a transmission and distribution loss of nearly 12 percent in Bangladesh, which is higher than the global average of 8.2 percent.

Rahamat Ullah Mohd Dastagir, additional secretary of the Power Division, said system loss is below the global average in city areas but high in rural areas because of long-distance distribution lines.

He blamed weak transmission and distribution lines for power cuts in rural areas.

The additional secretary also said the government has a plan to phase out from the rental and quick rental power system.

"Agreements with the plants using liquid fuel will not be extended while those with private power plants using natural gas will be extended without the provision of a capacity charge," he explained.

He further said the industry sector that plays a significant role in creating power demand in other countries is producing only 30 percent of total demand in Bangladesh – while households generate the most demand of about 60 percent.

About the prospect of renewable energy in Bangladesh, Rahmat Ullah said this green power is less feasible in Bangladesh as solar power requires a huge amount of land.