***Despite various attempts in the past decades it has proved beyond doubt that vested interests counterattack the authority that acts as road block. The reason is simple. The stakes are large: pilferage of even 15 per cent of electricity produced diverts almost equivalent to US$ 80 million into private hands, which resist any changes or reforms that would reduce their illegal gains***

YEAR after year the summer in Bangladesh faces the same old electricity crisis. The state owned utilities offer clarifications and pledges to improve the situation within three to six months. By then winter comes and the matter dies down because of low demand. The vicious circle in BPDB and DESA do not want to curb theft and pilferage, let alone conduct reforms. Every year, the consumers who pay bills regularly say that it has reached an intolerable level. But the life goes on. The government changes. The minister changes. The chairman changes. But the bureaucracy remains as strong as ever. It follows the golden proverb: the king is dead, long live the king.

In fact, the fish (corruption) is big but the net (policies and their implementation) is very small. The blame is on the poorly maintained generation with the public sector. Indeed, the country's power generation plants have been unable to meet system demand. There was a genuine effort to improve the situation in the late 1990s but it has now been reversed! Consequently, there is no safety net either. Whereas the oil and gas or fuel wood crisis are fundamental and inherent in that they stem from natural limits on resource availability, the electricity crisis is more a matter of planning and management.

And why not? After all Bangla-

desh is situated in Dhaka, said one insider in the power system, sarcastically. Though unethical, the DESA used to consume almost 52 per cent of the total electricity generated in the country, which has now reduced to around 40 per cent due to transfer of some of their franchise areas to the Rural Electrification Board (REB). Nevertheless, the importance of Dhaka has not reduced

found that BPDB, created in 1972 as a public sector enterprise, became unwieldy. Apparently, the World Bank came to the rescue. Before the situation became gangrenous, the government decided to unbundle a large part of the distribution component relating to grater Dhaka and give it to the newly created authority DESA as it was named as per prescription of the Bank. The amputa-

because we all live in this capital city. There is no sense of urgency for improving the system. Consequently, there is mounting disbelief about the authority's approach to reduce the power shortage. Nobody knows whom to believe. Credibility, in regard to the power industry in general and government in particular, is in short supply as electricity is.

This did not happen in one day. In late 1980s the power system loss became unbearable, over 40 per cent nationwide. The government

tion was done so hurriedly that all the vices of BPDB went along smoothly to DESA. BPDB survived through the operation but continued limping. Dhaka being Dhaka, the problems remained. In course of time political patronage to DESA continued when DESA's franking machine started to punch on wrong envelopes, the government became worried again. By then over half of the total electricity distribution in the country came within the grip of DESA. Frantic attempts were made in the 1990s to curb the monster, but to no success. This time the "wise" World Bank and the Asian Development Bank gave a new prescription to the power system in 1994 under the title "Power System Reforms in Bangladesh". The agenda was to unbundle and restructure the power sector in general and further unbundle BPDB and DESA and religiously protect the REB model (with system loss between 16 to 18 per cent, only in distribution activities) that continuously satisfies the desire of the development partners.

The DESA reportedly reorganised itself with all the vices of BPDB and acquired many other disqualifications through their captive mandates, free access to illegal practices and maneuvers. During the past decade the management and the workers union of DESA reportedly have accomplished perfection in pilferage and power theft, that they prefer to call system loss. Perhaps there exists uncomfortable concern among some consumers about system loss. They question why system loss, and why so high? Basically, there are two aspects of system loss: one is known as technical loss connected to generation, transmission and distribution activities, and two, the culprit nontechnical loss (or in other words theft and pilferage). In our neighbouring countries, except for Pakistan and India, the system loss is around 15 per cent depending on the ageing of the system components. In the western world system loss is non-existent. In Bangladesh, technical loss ranges between 12 and 14 per cent, while non-technical loss amounts to 18 to 20 per cent, which is outrageous!

Although the official authorship of the Power Sector Reforms, 1994 goes to the Inter Ministerial Working Group headed by the then Energy Secretary Mr. Faizur Razzak with the active assistance of some senior engineers, including Mr. S.T. S Mahmood, a reputed power engineer who later became Chairman DESA, however, the vineyard story is that one selected World Bank consultant took the painstaking job of preparing the basic document for reforms. Thus, the ownership of the reform exercise remained in dark. As a consequence, some stakeholders such as the workers union and junior management joined hands (under the banner of Oikyo Parishad) in late 1996 to nullify the government approved 'Reform Package'. This halted the most desired reform action on the distribution component.

Nevertheless, to introduce competition, attract foreign capital and augment power supply, the Private Sector Power General Policy was adopted in late 1996. Under this policy framework a number of Independent Power Producers (IPPs) were ushered in to the country. In the same year, the Power Grid Company of Bangladesh (PGOB) was created to take over the entire transmission business of BPDB/DESA. The country's average power generation capacity has increased one and a half times since mid 1996 yet the load shedding persists mostly due to non-technical loss. The old white elephant (BPDB) cannot even contribute 2500 megawatt of electricity with its 25,000 employees to the average daily generation pool of 3400 megawatt in the early summer of 2003. BPDB buys power from the IPPs, and also the Rural Power Company (RPC) created as an outfit of REB. BPDB's net purchases of power amounted to approximately 2200 megawatt in 2000-01.

However, the power scenario in Bangladesh is fast changing. While BPDB earlier functioned as a near monopoly, it is now gearing up to become a market player. Within BPDB too, several structural changes are taking place. But, actions on the worst component i.e., the distribution aspect still do not find priority in implementation schedule. As part of its long-term strategy, the distribution segments

must be operated and managed by separate corporate entities after proper unbundling. The sole focus of BPDB should be electricity generation under a holding corporation concept (similar to Bangladesh Petroleum Corporation created in 1977) and corporatisation of distribution components under Companies Law. These will not only make a major departure in the BPDB's functioning, it will also become a significant achievement in light of the Government's Vision 2000.

The demand for electricity in Bangladesh is expected to grow at about 8 to 10 per cent per annum over the next one decade. The response to this increasing demand must include efforts to improve enduse efficiency and, more importantly, reduction of wastage and system loss. Otherwise, it would become almost impossible to meet the rising demand. Energy efficiency efforts are needed not just to ensure that the gap between demand and supply is minimised but also because of high cost of supplying energy.

As stated earlier, Bangladesh has been experiencing power shortages since the 1980s mainly because of generation capacity shortages and the inability of gas based plants to compensate adequately during the mid 1990s. The extent of such power shortages has been increasing in recent years because of the growing demand for electricity, coupled with inadequate additions in peak load plants. Except for the period 1997-2002, the new generation capacity as expected under the long-term generation expansion plan (the PSMP, 1995) of the public sector has not been implemented according to the schedule.

The resulting power shortages have caused planned and unplanned interruptions that have seriously affected the quality of power supply at the consumer end. The main impact of the power interruptions, both planned and unplanned, is on the country's economy resulting from the loss of output in the industrial sector. The lost output is as high as one (1) per cent of the GDP (GOB's Policy Statement on Power Sector Reforms, January 2000 page 1). At the individual industry level, these interruptions can lead to serious financial loss to the installations that do not have the benefit of standby generation facilities (popularly known as captive generation) in Bangladesh. In addition, installations where production costs become non-competitive because of self generation conditions could face closure of their business. Many small and medium scale industries fall into this category. The total captive generation in the country is reportedly around 600 megawatt, attached to individual industries connected to the national power grid. However, such stand by generating facilities remain idle when either grid power is available or during the off-peak hours.

Sudden interruptions of power supply under unplanned outages cause a significant level of momentary loss, which dominates the cost figures associated with such outages. This is mainly because the consumers are not prepared for such interruptions, particularly the industrial sector, which depends heavily on the continuity of electricity supply. While the consumers can adjust their usage patterns to minimise the adverse impacts of planned outages, they cannot do so in the cases of unplanned outages. In fact, unplanned outages are always costlier to the consumers than planned outages. Moreover, advanced industries such as semiconductor industry require not only continuous electricity supply but also high quality supply where the voltage and frequency of supply are properly maintained. Although reliable estimates are not available, but various manufactures association indicate that production could be about 10 per cent higher if power supply were available. Losses due to planned and unplanned supply outages has been estimated by a World Bank Study Team as US$ 1 billion in one decade in Bangladesh (Energy Strategy Note: The World Bank, 1998).

Thus, it may be worthwhile to describe the losses in power as the result of illegal self appropriation of the sector by its employees and consumers which saps the power sector of vital resources. Despite various attempts in the past decades it has proved beyond doubt that vested interests counterattack the authority that acts as road block. The reason is simple. The stakes are large: pilferage of even 15 per cent of electricity produced diverts almost equivalent to US$ 80 million into private hands, which resist any changes or reforms that would reduce their illegal gains (The World Bank, Energy Strategy Note, 1998, page 3). The political government should no longer leave the subject to bureaucracy rather face it boldly for ensuring the stipulated growth and expansion. There is no reason why the Vision 2000 cannot be achieved if honest endeavour is pursued now.

Nuruddin Mahmud Kamal is former Chairman, Power Development Board.