The government has shifted its focus from power generation to transmission and distribution as the sector struggles with overcapacity even though consumers have yet to receive a credible supply of electricity.
Due to overcapacity, the country has to shell out a considerable sum to cover the cost of unused electricity.
This prompted the government to allocate funds in the next year’s budget to several large projects aimed at improving electricity transmission and distribution infrastructure.
Of the Tk 27,484 crore allocated to the Ministry of Electricity, Energy and Mineral Resources, the Electricity Division received approximately Tk 22,000 crore.
There has been no allocation for new projects for the generation system and only current power plants have received new funds, said Mohammad Hossain, managing director of Power Cell, an agency under the Division of Power. electricity.
“Electricity production is now in surplus. Thus, the government has placed emphasis on transmission and distribution within the budget,” he added.
Previously, about 80 percent of the allocation went to production projects and the rest to transportation. But for the next fiscal year, about 60 percent of the allocation goes to transmission and distribution projects.
As part of the transmission and distribution projects for the next fiscal year, new distribution stations will be built, old lines will be replaced by new ones, wooden planks will be changed and the capacity of transformers will be improved.
The Bangladesh Rural Electrification Board (BREB) is poised to implement numerous distribution projects that will help reduce power outages in rural areas.
A project involving Tk 4000 crore was taken under the BREB to develop the distribution network.
The Bangladesh Power Development Board (BPDB), Dhaka Power Distribution Company (DPDC), Dhaka Electric Supply Company, West Zone Power Distribution Company, and Northern Electricity Supply Company have also secured funds to upgrade their distribution systems.
DPDC received Tk 3,051 crore from the annual development program to extend and strengthen the power system grid. As part of the project, the overhead electric cables will be buried.
The government has allocated funds to develop the transmission system to evacuate electricity from the Rooppur nuclear power plant and the Matarbari and Payra power plants.
However, the budget for fiscal year 2021-22 is not in line with the government’s plan to phase out rental and quick-hire power plants to reduce expenses related to increased capacity charges.
Khondaker Golam Moazzem, research director at the Center for Policy Dialogue (CPD), praised the higher budget for transmission and distribution systems.
“But, the transmission and distribution systems have not been as important as they should have been, and the tendency to spend money on production continues despite the overcapacity,” he said. -he declares. “Without adequate investment in transmission and distribution, consumers are suffering from power cuts across the country.
The Matarbari 600 megawatt ultra-supercritical coal-fired power plant project received an ADP allocation of Tk 6,162 crore and the Rooppur nuclear power plant of Tk 18,426.
Although the allocation of the Rooppur plant is the responsibility of the Ministry of Science and Technology, it is still for power generation.
“The allocation for production is always higher than the funds set aside for transport and distribution, which is disappointing,” added Moazzem.
According to the CPD, 62 percent of ADP’s spending on the electricity sector went to generation.
The electricity sector is struggling with overcapacity. More than 48% of production capacity remained unused on June 2. Therefore, the BPDB needs a large amount of grants to cover its costs.
For the next fiscal year, the planned subsidy for the power and energy sector remained unchanged at Tk 9,000 crore.
The subsidy will likely mean that the BPDB will not need to seek permission from the Bangladesh Energy Regulatory Commission to increase the electricity tariff. This is undesirable during the crisis, the CPD said in its budget analysis.
Due to the inefficiency of the power sector and overcapacity, the government has to pay the capacity charges, forcing it to subsidize the sector.
“If they don’t get the subsidy, they have to raise the electricity tariff. If the quick rental plants and inefficient plants are phased out, this problem would be solved,” Moazzem said.
“We are awaiting a specific announcement from the Energy Ministry on how these quick lease power plants will be phased out, old plants will be shut down and new funding for coal plants will be suspended,” he added.
The government is committed to phasing out fossil fuel-based electricity generation and is moving towards clean energy-based electricity generation.
“But, the budget makes no such indication,” Moazzem said.
Industry insiders say extreme overcapacity is jeopardizing the government’s success in the electricity sector.
Currently, the installed capacity was 25,227 MW as of June 3, according to Power Cell. The maximum electricity production for the day was 13,014 MW. In Bangladesh, the maximum power of 13,792 MW was produced on April 27.
The overcapacity rates were found to be 59 percent, 46 percent and 49.8 percent in June FY18, FY19 and FY20, respectively.
The highest overcapacity was recorded in January and March 2020, at 63.3% and 62.5%, respectively.
Surplus capacity in developing countries is around 10%, according to the California-based Institute for Energy Economics & Financial Analysis.
Beneficiaries’ electricity coverage increased from 47 percent in 2009 to 99 percent this year, with per capita electricity consumption more than doubling in the meantime.