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Increasing negawatts

M. Shamsul Haque
The Daily Star's op-ed on the power sector by Dr. F.K. Khan (June 16) covered all aspects of the topic. The paper explained that the recent shortages were because of our dependence on one source — natural gas — only. At one time natural gas it was thought that the gas would last 20-30 years.
That agriculture would come up as a major user of electricity was not properly weighted, nor were mega shopping malls and the rapid growth of the textile industry. Dr. Khan also covered the regional situation and mentioned India's dependence on coal as a single source. Although there are sufficient reserves there was a shortage of 5% a year, hence India also is faced with short supply of electricity.
The recently concluded agreement between India and Bangladesh, where India offered to sell 250 MW of electricity, may not be forthcoming in the near term. Dr. Khan also mentioned negawatts (NW), a term indicating saving electricity in some ways and supplying it to others. The distribution of free CFL bulbs is an example of NW, as it will result in saving of electricity.
The article raised the issue of differential pricing of electricity according to peak time use and affordability. He correctly identified the wrong assumption in electricity pricing based on the concept of homogeneityin character of production and supply of electricity. That this was a wrong assumption to start with needs further explanation.
Not many products and services, even rice, can be called homogenous. For example, people use transport vehicles of different sizes and costs to move from one place to another. Rich people who can afford expensive vehicles use them regularly and spend Tk.10-15 per km for fuel, whereas others are happy to buy reconditioned cars forTk.5-15 lac and spend Tk.3-5 per km. We may not cite the use of buses and trains by common people as other examples.
The example of supermarkets and mega malls with a/c facilities is also relevant here. A World Bank study on the subject identified the issue of inequity in electricity pricing and said that the poor people paid higher charges than the rich in cities. The basics of economics say that demand is a function of price. We have always considered electricity price increases in general
for all users, and found that it was not acceptable to the users given the poor state of supply.
Now that there is absolute shortage, because of which we are forced to generate electricity at much higher costs from rental and smaller power plants using imported fuel, the rationale for charging higher prices from those who can afford is very strong. As a result, if demand is reduced it will add to NWs and the crosssubsidisation of the poorer people, especially farmers, by the richer urban people would be a welcome change.
It would not be politically unacceptable also as people in larger numbers will be benefited. In the USA, when gasoline prices reached $4 per gallon in 2008, mileage driven by the motorists fell by several billion miles, use of gas-guzzlers decreased, and people started making using alternativetransport.
On the other hand, the people in the urban sector will move to install solar panels at a much faster rate. That will add to the NWs in national grids. Already, many small shop/factory owners are using generators to produce electricity. It seems the use of solar energy will be the ultimate source of electricity in the long run as technology improves and cost of panels is reduced.
There may be some scope for generation from small hydro-plants. At the moment it does not hold much prospect. Regional sources, as mentioned in Dr. Khan's article, may be available in the future if Saarc countries cooperate in bringing changes in their policies. That is not likely to happen in the
next two/three years.
Dr. Khan has urged for research to be done on some of the issues he raised in his piece. That is, of course, a necessity to move ahead in this field. We may have additional reserves of natural gas, but gas has more productive use in production of chemical fertilisers needed to increase agricultural production.
The debate on coal mining technology and its use for domestic production of electricity should be brought to an end as soon as possible through research and dialogue with concerned parties. There must be a solution that is mutually beneficial to all the parties.
Managing demand through rational pricing policies and giving incentives for solar energy appear to be most useful strategies to follow in the short and midterms. We have moved to a relatively higher cost of electricity production and supply. That makes pricing policies even more important to ensure supply and equity among the competing sources of demand, with priority sectors such as agriculture being adequately subsidised.
It needs to be emphasised that delay in actions in the power sector has already caused tremendous loss in production and created uncertainty for new investment in the country. We must catch up in all respects to restore the desired balance needed for faster economic growth and reduction of poverty.
M. Shamsul Haque, Ph. D., Is a Professor and VC, Northern University.