Rental power plants may get one-third

The dominance of power sector in the overall subsidy basket will continue in the new fiscal year due to the costly rental power plants while the experts said curtailing unnecessary expenses is an imperative for employment and food security amid the COVID-19 outbreak. 

The finance ministry officials calculated that Tk 18,000 crore, almost 30 per cent of the overall subsidy and incentive basket in the new fiscal, would be kept aside for generating electricity and importing liquefied natural gas.

Half of the amount would be utilised for producing electricity and the other half for importing LNG, with around 80 per cent of power subsidy for the rental power plants in the form of capacity charge.

Consumers Association Bangladesh energy adviser Shamsul Alam said that the  government needed to cut all illogical and unnecessary expenses, especially in the power and energy sector.

It was an imperative to increase subsidy allocation to other sectors like health, food and employment generation amid the catastrophic COVID-19 outbreak, he said.

Since 2009 the government has permitted establishing more than two dozen of rental and quick rental power plants allegedly to benefit a group of businessmen.

Most of these power plants remained unused round the year, but the government has to provide them money in the form of capacity charge, a controversial clause pertaining to purchase of power from the rental power plants.

Former Bangladesh Bank governor Salehuddin Ahmed said there was no further logic to buy the costly power from the rental power plants. 

The subsidy fund could easily be diverted to employment generation schemes and utilised for the food security amid the COVID-19 crisis, he said.   

Tenure of these plants was supposed to be short-lived, but the government has extended the tenure of most of the plants on a number of occasions and they would be around till 2024.

According to a report released in May by the US-based Institute for Energy Economics and Financial Analysis the government paid idle power plants Tk 9,000 crore in fiscal 2018-19 for it could use only 43 per cent of the generation capacity.

The finance ministry officials said they planned to provide Tk 5,953 crore for food subsidy, Tk 9,500 crore for agriculture subsidy, Tk 6,825 crore for export subsidy, Tk 500 crore for jute subsidy, Tk 3,060 crore for remittance and Tk 6,000 crore cash subsidy in the new budget.

Finance minister AHM Mustafa Kamal will announce the new fiscal measures in his budget speech in parliament on June 11 against the backdrop of the economic slump due to COVID-19.

Over two-month shutdown enforced by the government since March 26 has created multiple problems and challenges amid the shortfall in revenue generation that is poised to cross Tk 1 lakh crore in the outgoing fiscal.

The IMF has projected only 2 per cent GDP growth in the outgoing fiscal taking into account the pandemic fallouts.

The country last witnessed a less-than-three-per cent GDP growth (2.83 per cent) in 1989-90 due to a devastating flood.

The government is likely to lower GDP at 5.2 per cent from the projected over 8 per cent in the out-going fiscal, said the finance ministry officials.

Former caretaker government adviser Mirza Azizul Islam said the subsidy should be aimed at generating employment as the virus outbreak made 80 per cent informal workers jobless.

He said that the government should give emphasis on job-oriented education as a BIDS study released in December 2019 showed that the rate of unemployment among the educated youth was 33.2 per cent.

News Courtesy: www.newagebd.net