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Download PDF The BNP-led alliance government’s handling of the power sector reminds what Aesop had said hundreds of years ago — ‘honesty is the best policy’. In other words, dishonesty is the worst policy. In its five-year rule, the alliance government has allowed dishonesty to dominate various executive decisions in the power sector. As a result, the government has failed miserably in the power sector and the nation is bearing the brunt of it.
This failure is a sharp contrast to the success in the power sector during the previous Awami League rule. The AL government had brought in around 1,300 MW electricity generated in private sector. The biggest reason of this success was honesty and predominantly corruption-free handling at the highest level of the government.
As the alliance government is set to hand over power to the caretaker government this week, the country is reeling under a load-shedding of 2,200 MW. Had the AL not pursued private power, this load-shedding would have hit more than 3,000 MW. The country presently consumes 5,200 MW.
That the 4-party government has failed in the power sector is well reflected in the incidents of the Kansat killings in January and countrywide anger and protests in August-September this year. People want uninterrupted power supply, but the level of load-shedding exceeded all limits of tolerance.
The discontent over power supply forced the otherwise indifferent government to change its power minister twice.
The BNP-led government’s dismal performance in the power sector is not surprising. The BNP in its previous term (1991-96) had ignored the power sector; made crooked power deals and left the country for an inevitable electricity crisis.
According to the data of Power Development Board (PDB), the demand for power in Bangladesh in 1990 was 1,509 MW while the generation was 2,100 MW. But this surplus situation did not last long. In 1996, when BNP completed its first term and left power, the demand went up to 2,200 MW and supply down to 1,900 MW (maximum) — leaving a deficit of 300 MW.
When the AL government left power in June 2001, the country was generating 3,033 MW power against a demand of around 3,394 MW. But this situation nosedived in the last five years of BNP rule. In 2006, the country’s power generation hovered around 3,300 MW at the maximum, and sometimes dipped to 2,700 MW. But the demand has soared up to 5,200 MW.
The power sector’s top administration also underwent severe volatility. The PDB chairman has been replaced eight times and the power ministry secretary on as many occasions.
All of this volatility originated from the Prime Minister’s Office (PMO) that intervened in each and every decision of the power ministry or the PDB. It was no secret that two subsequent state ministers for power were in loggerhead with the PMO and the power secretary, who is reportedly a nominee of the “alternative powerhouse” and serving the interests of certain quarters.
In contrast, during the AL regime, both the power secretary and PDB chairman enjoyed absolute confidence of the prime minister. At that time the PMO and a powerful secretary-level committee were seen assisting the power ministry and the PDB in coordination with other authorities in implementing the projects.
The demand-supply disparity widened mainly because the government, despite its failure to implement new power projects, doubled the rural power supply network. This massive expansion of network has financially benefited only the electricity pole suppliers –who are basically some political bigwigs, and the ruling party lawmakers aimed at taking political leverage of bringing power distribution lines to their constituencies.
Between 1977 and 2001, the Rural Electrification Board (REB) expanded its network covering 15 million people under 3 million meters. Between 2002 and 2006, this network has been expanded to 6 million meters covering 30 million people. The demand for power under REB shot up from 800 plus MW to 2,000 MW in the last five years. But the rural network receives about 600 MW now.
HONESTY VS DISHONESTY
There were instances of corruption during the AL regime, but all were outside the private power projects and mainly in supplier’s credit schemes. One instance of corruption in private power deals involved the land development for the Meghnaghat power project. But all other private power schemes were clean. There was no re-tendering, no formal complaint. All the schemes undertaken by the AL government came into operations by 2003.
In contrast, the BNP government failed severely in private power. A glaring example is the third Mymensingh 70 MW Rural Power Company Ltd (RPCL) project. The RPCL, owned by the Palli Bidyut Samities (rural electricity cooperatives) and REB, is not a typical private company. This project costs $120 million –which is three times costlier than any other project of its size.
This manifests massive corruption by some high-ups who inflated the project cost. The huge cost will ultimately be passed on to the poor rural consumers. The project is one year behind schedule and there is no sign that it will be launched soon.
The second private project is the 450 MW (revised 490 MW) Meghnaghat-2 with the Bon Consortium consisting of the alliance government’s favourite Orion and Belhasa group along with German company Steag. The Bon consortium signed agreement on October 12, 2006 and is likely to start operation in 2008. But many doubt if the much-favoured consortium would at all be able to get funds for the project.
The Orion-Belhasa was given the contract in blatant violation of rules and regulations. The original bid was led by Japanese Nisso Eiwi. Soon after getting selected using Nisso’s qualification as the lead bidder, Orion brought in Steag and placed it as the lead bidder. It is like recruitment of one person on the basis of another person’s interview. This has been possible because the Orion group is known to be close to the ‘alternative powerhouse’.
The government was also busy bending rules to award the Meghnaghat-3 450 MW power project to an inexperienced and unknown consortium named Cadogan-Manning on the basis of unsolicited negotiation till this month.
Besides, the government has signed two costly skid-mount power schemes, one with GBB in Bogra for a 20 MW plant and the other with Ornate in Fenchuganj for a 50 MW plant. The GBB is run by leader of the ‘alternative powerhouse’ and the Ornate by son of a powerful minister of Sylhet region. These contracts will make the PDB bleed as per unit power costs are between Tk 2.80 and Tk 3.
In public sector, the government awarded the 80 MW Tongi power project to a novice Chinese company Harbin that failed to work. It awarded another 90 MW power project to the same company which might start operation in 2008. All these schemes were re-tendered after specific complaints came against the government siding with Harbin.
The government has killed a mature bid for a 450 MW power project due to narrow political rivalry while a number of power projects simply fell flat because the government was trying to award them to incompetent, yet favoured, companies.
In contrast, there had been very little allegation against any of the projects undertaken during the AL regime. The AL government’s worst corruption-plagued project was the Barapukuria 250 MW, implementation of which did not start before March 2001. The alliance government could have suspended it, but it did not. The reason is — the local agent of this project implementing company is Hosaf, an old beneficiary of BNP.
Within 100 days of its assuming power, the alliance government had published a white paper on the corruption of the immediate past AL government. The list of allegations included the land deal of the Meghnaghat project, Bhola 20 MW project (which was being awarded to Harbin), Khulna 210 MW project under a Chinese supplier’s credit), Sylhet 150 MW CC plant (supplier’s credit), Bheramara 450 MW CC plant (supplier’s credit) and 210 MW Siddirganj project under Russian supplier’s credit. Consequently, it suspended all power project related activities.
LOAD-SHEDDING DATA MANIPULATION
The alliance government’s dishonesty in power sector was also evident in the manipulation of the official figure of daily power load-shedding. According to PDB data, in 2003 the country generated 3,428 MW of electricity against a demand of 3,947 MW –leaving a deficit of over 500 MW. The PDB says the electricity demand is growing at the rate of 10 percent.
After 2003, the government started showing a false official power demand figure so that the level of load-shedding does not look as appalling as it is. On October 8, 2006, when the official power generation came down to 2,800 MW, the government said the demand was 4,200 MW. But according to data compiled from Desa, Desco, REB and PDB, the peak demand now is over 5,200 MW and according to the government’s Power System Master Plan- it is close to 5,900 MW.
TONGI PROJECT: A PRIME CASE OF CORRUPTION
The first bid on Tongi project was floated in 2000 under the AL regime. It drew a $31 million offer from Malaysian company TNB. The bid was good, but when a deputy secretary insisted on getting Tk 10 lakh as bribe, the company refused to pay and lodged a formal complaint with the government. This tender later fell flat –thanks to the corrupt bureaucrat.
After the alliance government came to power, the second tender was floated in early 2002, but it fell flat under pressure from lobbies. Then there was a silent third tender in which Harbin was picked up with a financial offer of TK 360 crore –which is much higher than the first TNB offer. According to sources, the ‘alternative powerhouse’ forced the PDB to pick Harbin’s bid.
The company was supposed to install and commission the plant in 2004 –but brought it in test operation in May 2005 and started commercial operation in September.
On the other hand, the Tongi plant turned out to be a grossly flawed project. The highly unreliable plant tripped for nearly 90 times between May 2005 and October 2006.
Internal investigations revealed literally hundreds of flaws in the machinery and substandard equipment. The investigators accused a number of PDB high officials of helping Harbin get away with bad machinery. Till date nobody has been punished.
Initially, perceiving the Tongi plant deal was a great success. But sources said the young leader of the ‘alternative powerhouse’ of the government intervened in all power projects in the pipeline and started awarding projects on the basis of the political affiliation of the contractors or their ability to offer ‘commissions’.
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