Special Article

Electricity Sector Problems & Their Solutions
Shamsul Islam

For the last several years during peak demand hours particularly from 5pm to 10:30pm the public sector organizations generating capability cannot meet the increasing demand. Load shedding and power failure is recurring phenomenon. This situation cannot be allowed to continue for long. 

Sense of Despair
Shortage of electricity and power failure is a topic for discussions and reason for suffering of many consumers’ particularly in urban centers and in those lucky rural areas where REB commenced functioning. A large part of the country and its population are without electricity. They have problems of not getting other essential items for sustaining their livelihood. Many of us perhaps consider that those problems many not needs as much attention as electricity. This is a matter of judgment and comparison. 

Relationship between Levels of Income, Poverty & Electricity
We are one of the poorest and most over populated nations. Our resources base is quite small and narrow. Reserve of fuel is not very high. Electricity is a form of converted energy in a convenient form. Unless we able to import huge quantity of energy either in primary or in secondary form, we cannot meet the need for supplying uninterrupted electricity to the entire nation. By setting a target of electrifying the entire country by a certain year, we are unnecessarily increasing the expectation of people and also creating a unhealthy competition among various areas of the country of getting electricity supply before other areas of this land. Our resources base including human improvement and ingenuity do not simply allow any one to supply electricity to the entire nation within next 15 years. The sooner we realize the better. Import of fuel oil is exhausting most of our FE earning. As such import of coal/gas/electricity in large scale is almost impossible. 

Fuel Discovery & Supply
Indigenous fuel namely coal and natural gas are not only meant to be used for production of electricity. Those precious fuels are needed for production of fertilizer and as raw materials and fuel for many lucrative, job, creating, high value adding industrial activities including agriculture products based smaller industries. Only a certain percentage of efficiently recoverable indigenous fuel can be used for electricity production. Reserve of coal at any depth or reserve of natural gas at any location does not mean that those could be extracted and used commercially. Only recoverable fuel reserve may be considered for production of electricity. 

There is hardly any prospect of producing nuclear based energy in this; thickly populated country surrounded by neighbors. We have access to the sea only one side. 

Present Situation
No doubt the present situation demands immediate solution. But there is no reason to conclude that nothing tangible can be achieved within next 2 to 7 years. Of course the situation can be improved with strong will and sustained efforts within a reasonable time period. 

Actions Needed (Political leadership)
The policy decision authority need be convinced about the importance of improving this ailing important sector of the economy. The next minister for energy must be a dedicated and honest person with determination and holding a full time job. The practice of appointing a state minister for electricity for the last 15 years need be discontinued. Unless the minister appointed for the purpose commits something very illegal, he or she should be allowed to continue to hold the post for at least 3 years. 

Competition to bring respective area of the influential members of the parliament under area coverage of electricity and to extend haphazardly electricity distribution line shall be stopped. Electricity can not be used for getting votes in next election. 

Bureaucracy & Management of Electric Utilities
Recruitment of top officials of PDB, DESA, DESCO, REB and PGCB etc shall be made through a process of advertisement and proper competitive and impartial selection in every case. How can the Chairman BPDB get lower salary than the Chairman of small company under him? Once appointed, they should not be transferred within the contract period. Establishment of accountability and authority to work is essential for improvement of power sector. Secretary of the Ministry need be one of the best senior officers in his category. 

Involvement of all Employees & Trade Union
Reorganization of the sector should be done in close consultation with the employees and the trade union. A sense of insecurity and despair prevails at almost every level of employees of many of power sector organization. How can we expect improvement from such a group of demoralized employees? Trust and confidence need be re-established at the very outset before we can even expect improvement. Only sermons and wish can not improve the situation. Total involvement as a team is the crying need. At present skilled person is not recognized or rewarded. 

Major Problems
Anomalies in landing terms, fixation or rates of interest, method of accounting, burdening one corporation for the benefit of another, non-payment of electricity dues in time by the public sector are the major impediments of running efficiently the power sector organizations. Even now the fuels bills can not be paid. Increase in generating capacity would simply increase the amount outstanding as fuel bill. 

Simple notional increase in electricity tariff is counter productive. The consumer must pay the true accounting cost of supply electricity to him during the time of high demand. The time of providing free lunch is over. While investments are made with borrowed hard currency, the consumer whether he is located in rural convertible currency. Subsidization is not the responsibility of electricity sector. If a consumer can purchase imported goods from the shop at regularly increasing price ,he or she should be able to purchase electricity also at regularly (say at a gap of 6 months) higher prices. 

Tariff Adjustment
Regular increase in electricity tariff is certainly not a popular move. Every beneficiary consumer expects good supply of electricity at no or at less cost. For any popular government, it is not practically possible to raise prices too frequently. As such at the beginning of every year the prices need be adjusted. Unless this is done the following problems would only increase in intensity and nature. 

a. Increase in electricity demand would grow very fast as comparatively electricity is the most convenient and under priced energy. Such increase in demand can not be met financially. 
b. According to the executed contracts most of the private sector power producers are to be paid in convertible currency. 
With regular depreciation of value of Taka, the financial burden on BPDB increase very fast. Whereas electricity is sold to consumers and to bulk purchase at a reduced price. This phenomenon makes the organization unsound and normal expansion and improvement activities are affected. That is not a sound management practice. 
c. Increase in fuel price is now a normal trend. As such cost of electricity produced through use of the fuel need be adjusted. 
d. Investors in the power sector (GOB, ADB, WB and others) must get paid back their respective investment with reasonable rate of return. This is not possible unless electricity prices are adjusted to meet the accounting cost of production and supply. 

Involvement of Private Sector
Several decades ago, even before the British left this subcontinent there did exist regular electricity supply undertaking in this part of the world (Dhaka, Naraynagan etc) This was a good method of supplying electricity in isolated towns based on demand and supply. While encouraging private sector investment in this sector, the investors may be asked to take over a finite and well defined area to generate, transmit and supply electricity. Within certain limits the investors may be allowed to adjust prices. This is neither a new nor a revolutionary idea. More or less this concept was used while privatizing public sector entities in this country. Only if the private sector is allowed to generate and supply electricity and to be paid in local currency, major problems like making regular payment against supplied electricity can not be solved. Unless the investor is able to get paid regularly, the whole system would become nonviable. 

Advisory Council
The immediate past Government did constitute one advisory council headed by the State Minister for Energy. Parliamentary Members, academicians, trade body representatives, trade union representatives, eminent experts in the field and heads of all electricity undertakings were the members of the council. Very useful works done and recommendations submitted. Surely implementation of some of them in phases would improve the situation considerably. 

Payment of Reasonable Salary & Wages
In the same electricity industry be that in private or in public sector the difference in pay scale must not be very large. In this sector, involvement of public sector would continue for a long time to come. As such efficient and capable persons must be attracted, trained and continued to be kept in electricity public sector undertakings if those are to run efficiently. 

System of Financing & Accounting
Need be examined and streamlined. At present every organization follow different practice. Efficient comparison of financial performance under this scenario is not possible. 

(We intend to cover the other major problems and their suggested solutions in future)

Shamsul Islam BSc. (Engg), FIE: Former Chairman, Bangladesh Power Development Board (BPDB)