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Energy crisis dominates budget talks

Star Business Report
Business leaders and economists have suggested extraordinary attention from the government to steer the country out of the current energy crunch for the greater interest ofindustrialisation.
Some of them also urged the political parties to reach a consensus on coal extraction method so that Bangladesh can set up coal-based power plants.
The observations came at a discussion on "Industrial Prospects in Budget 2012-13" at Ruposhi Bangla Hotel in the city on Friday.
Private television channel RTV organised the programme in association with Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA).
The discussion — which came ahead of the upcoming budget the government is due to unveil on June 7 — was aired live on the televisionchannel.
Finance Minister AMA Muhith said the upcoming budget would target faster economic growth. "We need macroeconomic stability and social equity for achieving higher GDP growth."
He said the budget would simultaneously focus on rural economies, agriculture, industries and infrastructure.
“Our energy sector, particularly power generation, is in a mess. We must pay attention to it,” Muhith said.
He said the electricity production has doubled in the last three years. "The crisis is still acute because demand has gone up
sharply amid the doubling of the size of the economy."
The minister said the rationing facility for garment workers would continue. "We will also allow duty-free imports of generators."
Muhith said the railway sector did not get any attention in the past. "This year we will allocate properly for the sector."
He said the upcoming budget would face major challenges in achieving higher economic growth and fixing infrastructure bottlenecks.
"The country's infrastructure is in a stage
where it can not help achieve higher growth. Inflation has also to be brought down."
The minister said the credit growth to the private sector has come down to 17 percent, which is acceptable.
Muhith said the country's export-oriented industries have to be kept bullish. "The private sector is the driving force of the economy. We have to see opportunities which give more scope to the private sector to contribute to the economy."
He said his government has not been achieving much in skill development. "We will attach proper priority to the issue this time."
Former commerce minister Amir Khosru Mahmud Chowdhury said the balance in macro economy which had grown in the last 20 years has been damaged. "The disaster in the energy sector is the main reason for the problem. There has been miscalculation in the governments' plan to fix the energy sector."
Chowdhury, a BNP leader, said there is no effective control in holding back the bank interest rates mainly caused by the monetary policy. "There is a liquidity crisis. The government's excessive bank borrowing has curtailed loans for the privatesectordrastically."
He said investment-friendly environment does not exist in the country now. "The electricity sector is now in a total mess."
"Electricity crisis has not only damaged the macroeconomic stability; it has also put the balance of pressure under serious strain as the government is borrowing heavily from the banks to import expensive petroleum."
Chowdhury urged the government to publish a white paper on electricity outlining what has happened in the sector in the last three years, how the economy is going to be affected due to this and what price the people are going to pay in the future for the government's failure to fix the sector.
BGMEA President Shafiul Islam Mohiuddin said the country's infrastructure is now in a very sensitive state. "If the budget fails to address the issue the contribution of industries to the econ-omywould falter in the coming days."
He said the higher rate of interest has become a cause for concern. "Industries cannotrun with 19percentlending rates."
He said political stability is a precon-
dition to macroeconomic stability.
Jahangir Alamin, president ofBTMA, said their production capacity has been cut by 40 percent due to energy crisis.
Former Bangladesh Bank governor Farashuddin said there had not been investment in the country's energy sector for eight years. "Thanks to sudden heavy investment in the sector people's expectation has gone up."
He said the government has to think whether time has come to review the agreements for producing electricity from rental and quickrental power plants.
"We should give emphasis on solar and biogas. We have to extract coal through open-pit mining. We need to reach national consensus about extracting coal." “There should be unbalanced growth in the energy sector," said the economist.
He urged the private sector to share their profit with their workers and set up low-cost dormitories and healthcare centres for them.
Nasir Uddin Chowdhury, first vice president of BGMEA, who spoke from the Chittagong studio of RTV, said the cost of doing business has gone up due to electricity and gas crises, wobbly infrastructure andhigherbank interestrates.
"Our competitors in the neighbouring countries are not facing such crisis. As a result, we are losing our competitiveness," hesaid.
Abdus Salam Murshedy, president of Exporters Association of Bangladesh, said their factories face load-shedding of four to five hours a day. "Even if we get gas the pressure is too low. As a result, thetextile units cannot run when they are supposed to run."
Industries Minister Dilip Barua said
the tariff on industrial raw materials should be lower. It would be better if the duties were brought down to zero, he reiterated.
Md Jashim Uddin, first vicepresident of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said if the budget only targets raising revenue collection it could affect industrialization adversely.
Asif Ibrahim, president of Dhaka Chamber of Commerce and Industry, said the budget should enable the country's private sector to contribute more to the economy. "The investment to GDP ratio must be raised from the stubborn 24 percent."
He said the existing tax holiday facility, which would exp ire this month, should be extended to 2015. There should also be special allocation for sp ecial econ omic zone and railways.
Commerce Minister GM Quader said he does not think the ongoing debt crisis in the West has affected Bangladesh's exports.
He also said there is no political instability in the country. "Of course, there are strikes. But they are not affecting the trade and commerce too much," he said.
Atiqul Islam, a member of BGMEA, said the government should help the garment exporters provide food rations to the workers throughout the year. "The government should also come up with budget allocation so that dormitories and healthcare centres for the workers could be set up in industrial areas."
Khondaker Golam Moazzem, senior research fellow of the Centre for Policy Dialogue, urged the government to set