The fight for publicly-owned electricity in Bangladesh

To start with, in my humble opinion, there exists a fight for publicly owned electricity that is going on for decades in Bangladesh. The development partners, in particular the World Bank, now apparently are opposed to public power. Nevertheless, on a personal note, I want to thank the Bank for bringing up the issues. I think this is an important public issue, one that is fundamental to our economy, our environment and a semblance of social order in our daily life. However, when our electric bills go through the roof and we hear no public announcements about the risk of power outages from the government we become very concerned. In fact, the fundamentals become very real for the thirty per cent minority that are privileged consumers of electricity in this country. Unfortunately, the owners and operators of public power seem to be relaxed on its performance. It would also seem unbelievable that the government thinks such accusations are unreal, perhaps because the authorities consider they are talking to teenagers.

I, at times, feel frustrated when I recall my days in the BPDB during 1996-99 when some important professionals in BPDB and top brasses (bureaucrats) in the government used to give a smile took to the pioneering effort in private power in Bangladesh. Thanks to the then Prime Minister Sheikh Hasina whose vision and sincerity had helped to rescue the electricity crisis situation in the late 1990s. The effort made it possible to add about 1400 megawatt of new private and semi-private generation capacity and 270 MW public power to revamp the country's total installed capacity to about 4700 MW from about three thousand megawatt level, a record improvement in the history of power development in Bangladesh. The present government, however, has not adde, even a single megawatt on its own in the past about 30 months, perhaps for fear of being biased towards public or private participation.

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Like others, I have also heard many times over in my lifetime that the government should not be involved in electricity business. Those who say such things also claim that the public sector is not as efficient as the private sector, nor as innovative. Moreover, political interference, such as regulating electricity rates distorts the economics of the power industry. Markets forces may be ignored, but they cannot be defeated, and we will ultimately regret even trying. While there may be some role in the electricity system for government, "public ownership and operation of system assets is a bad idea that inevitably leads to unsustainable public debts."

These are now familiar claims that you and I have been hearing for years from those advocating privatisation and deregulation of Bangladesh's publicly owned power system. Ironically, these are also precisely the same claims made over the past two decades. Earlier, the donors had clearly supported public power system in Bangladesh and financed them without much reservation. To this day when I drive by those huge towers, I say to myself, " you helped to build all of this..." Hundreds of kilometers of powerline have been built over the past fifty years. None of us wants to see our work, and that of many others like us, sold off and used for private profit.

Some say, corporate power interest failed then to public power. But it seems they have won, decades later. Is it because the market place has brought in a marked change? The rumour is that the government, instead of promoting a simultaneous development of public and private power system, is scheming to sell off huge publicly owned system assets through introduction of a new animal i.e. regulatory regime. The law that has been enacted is farcical and biased towards government interference and not independent nor neutral in its scope and implementation clauses. The new corporate power interests and their political representatives endlessly repeat the mantra that the privatisation and deregulation (or peculiar regulation) of our electricity system must be forced to march forward. Ad nauseam they seemed to say: "we have no choice but to privatise and deregulate."

I know I am not competent to offer any message that the opponents of public power are as wrong today as they were in the early 20th century, when the Electricity Act was enacted in 1910 and at least sixteen private power developers initiated generation and distribution in their respective franchise areas in sixteen district headquarter towns of East Bengal (now Bangladesh). In those days, electric power was used only for lighting in the homes of elites. By late 1950, all the district based private power companies would no longer expand through construction of transmission lines essentially because of investment limitations. Of necessity, public sector was ushered into the power system domain. But, as the time passes they are gradually becoming inefficient and corrupt to their bones. Government indulgence has aggravated the situation and also paved a way for private power. Now, electric energy is essential for the economic development of the country, as expected, and the social progress that follows in its wake. Private power developers, though entrepreneurial and industrious, give no sign that they would be guided by notions of the public good. The mandate was, as has always been, to make money for their shareholders.

Admittedly, today, affordable, reliable electricity continues to be a cornerstone of Bangladesh's economic health. No one doubts this. The only disagreement there is on whether the public or private sector can fulfil this need in Bangladesh. The energy related challenges we now face, however, go beyond power prices and availability. An environmental stew, that seemed being cooked slowly for past several years, is now boiling, over, particularly in the old public power plants, transmission lines etc. Even human health problems are warning us loudly that the effects of pollution are impacting our societies, more intensely than before.

The public power industry with outdated and outmoded plants is a large part of the problem and must be an equally large part of any solution. At the same time, a technological revolution is underway in both the demand and supply sides of the electricity sector. I don't expect Bangladesh's public power would be a leader in this revolution, as it was in the movement that electrified many rural areas and also the urban areas, in the past three decades. No body knows now whether the public power will only engage itself with low quality generation from outdated technology or act as only buyer of electricity from the IPPs? Neither the public sector receives adequate investments in generation nor it is able to use new technologies that produce more environmentally benign energy and use it more efficiently. Unless the public power system changes its attitude, it will face disastrous consequences.

The opponents of public power today say that the private power is the most effective agent of change in meeting all these challenges, and introduction of regulatory measures is essential to unleashing the benefits that will flow from individual enrichment initiatives. Regrettably, they add, there may be some transitional hiccups as did happen in USA and Canada (California, Alberta, New York). Such problems may inhibit progress as the country move into brave new world of market discipline.

History has already started to prove the opponents of public power generation wrong. North American power prices are unstable. System reliability, which the public sector in Bangladesh didn't worry about for decades, is now a front-burner issue. Most unfortunately, Bangladesh's public power sector is now falling behind in energy technology research and development. It seems the government would again lay its hands on even thirty-year old Chinese technology for new electricity generation after burning its hands in two 210 Megawatt Power Plants set up at Raozan (Chittagong) in late 1980s and early 1990s, respectively. It seems we don't learn nor do we care whatever happens to the interest of Public Power!

Nuruddin Mahmud Kamal is a former Additional Secretary to the government.