Daily Star(DS): Why the power sector is in such a shamble today?

Iqbal Hassan Mahmood (IHM): As a matter of fact, the power sector has been suffering from its inception. The management has been very weak resulting in complete chaos, as much so that the development partners withdrew funds from this sector. It was only then that the government realised they had to buckle up their shoes. But no positive steps were taken even after that and demand for power was not high either in those days. All of a sudden, from the mid-eighties, the demand began to increase sharply. The garment factories were set up, other industrialisation started, demand increased in the rural area too because of irrigation purpose.

Suddenly the sector was cramped with loads of problems, but there was no money, there was no proper planning. People's tendency is to take those things for granted which come through the cable and run by the government. They think they can get away without paying for it. Plus the corrupt officials of the department didn't help much either. They were involved in all kind of malpractice. At one stage the system loss, in other word theft, went up to 54 percent. Apart from that, whatever electricity we supplied, the amount of unpaid bills was something that was totally unacceptable for any commercially run institution. So how do you expect it to run smoothly?

DS: But why your government in the early nineties didn't do anything about it?

IHM: It was the BNP government which formed a special committee in 1993 and prepared a reform programme approved by the cabinet. One of the prime recommendations was to unbundle the system, meaning that all the generating power stations should be independent, responsible for their balance sheet and the transmission should be a separate entity.

DS: But wasn't such unbundling process already in the making? For example creating Dhaka Electric Supply Authority (DESA).

IHM: DESA was created on paper during General Ershad's regime but was implemented during our government according to donors' suggestions. But I have no hesitation in saying that creating DESA was a wrong thing. If I were the minister then, I wouldn't have accepted it, because you are creating a new autonomous body by breaking Power Development Board (PDB) and making the overhead very high. It also meant that all the corrupt people would be brought under one umbrella; including those who were responsible for the mismanagement in the first place. It was basically old wine in a new bottle, only the cost of management became high and the government had to bear the cost.

DS: Why didn't the governments take any actions against those corrupt officials who, in your words, were responsible for the mismanagement? Did political influence play any part in it?

IHM: Of course, there was politics, there was trade union involved. But as I told you earlier that BNP brought the reform programme, the next government of Awami League went for Independent Power Project (IPP) without assessing the real situation. With IPP, one would have to pay for electricity up- front. They also brought barge mounted power projects, which were expensive. So, on one side, PDB was sick financially, on the other hand PDB was told to buy power from IPP at a higher rate and sell at lower price and the gap would be filled from the annual budget. But the money was not there. So I was left with a huge problem.

DS: Without getting into the blaming game, the fact remains that corruption is still rampant in the sector. Corrupt meter readers very rarely get sacked or suspended even after their stories are splashed in newspapers.

IHM: I have taken actions against many since taking over the ministry.

DS: Exactly why a minister, and not the high officials of the institutions, had to do it? Did they not know about it? Or did they just turn a blind eye?

IHM: Well, you have asked a very good question. All that I would say is that the responsibility of the politicians, i. e., the ministers, was to begin the process and give some sort of indication to the bureaucrats that they too can do it. Only then things will change. As I said I have already taken steps against lot of people and the pressure is mounting.

DS: Your party itself is involved in trade union. Are you saying it doesn't influence the running of the PDB, DESA etc?

IHM: Not any more. Today you can go to the DESA building, you would see a notice on the wall which lists the dos and the don'ts. It also says that if one doesn't follow them and lose his job, the trade union won't support them. I had to work hard to achieve it. I had to tell them point blank that if they didn't listen to me, I would have to liquidate the organisation.

DS: Let's talk about private investment in the power sector. Why don't your government encourage private investment in the sector?

IHM: Government is keen on private investment but the government would also like to have control over the generation of power. It has to be a shared arrangement with the PDB. I would like to make a point in this regard. Electricity is a main ingredient for modern life. If you give the private sector all the freedom, the government would be held hostage by them. They will say our cost has gone up, we will have to increase the tariff.

DS: But the government itself has increased the tariff?

IHM: Yes we have, but it is still below the cost. No private enterprise will do business with a loss.

DS: But since the government can't provide enough electricity, shouldn't there be a provision for the private sector to operate?

IHM: Even if we call the private investors, the people of this country will not be able to bear the high costs. Even if we bring them to invest here, the government will have to bear the differences of the costs. Now you tell me - with the current revenue earning from this sector, how would the government be able to achieve success. So I am trying to blend the government and private enterprises as in joint ventures.

DS: And, in the meantime, you are making people suffer monetarily and emotionally?

IHM: No, I am not. I simply don't have the money. The government has lots of priorities to attend to health, education, sanitation etc. So we have to spend the money judiciously. You can't always depend on the loans because you have to repay the loans as well. We can't expect a full proof system to operate in financial constraints.

DS: But how would you explain four grid failures in just 16 days as it happened as recent as in August?

IHM: It happened because of cheap machines. We don't buy expensive machines, we buy the cheap ones, because we have to buy them through tenders. The lowest bidder gets the contract.

DS: If you know that the cheap machines are not going to provide good service, then why buy them?

IHM: Because that's the rule. I can't break it. We can't forget that one has to pay good price to get good technology. The important point is that we don't have the luxury of having two sets of machines. When one transformer fails, we can't rely on the other. So we are trying to build a ring of substations around Dhaka for emergencies. We have already built two, two more are to be built in Aminbazar and Keraniganj. But as usual my pocket is empty. I don't have enough funds. We are negotiating with the donors. They have asked for some reforms to be implemented which we have taken into account.

DS: But you admitted yourself that the reforms prescribed by the donors earlier were wrong. Then why did you agree to the fresh reforms?

IHM: When I began to negotiate with them, I told them categorically that though reforms are needed to run the power sector in a commercial way and the government would provide all the support, the reforms would have to come from the soil of Bangladesh, not from Washington or Manila.

DS: So what kind of reform programmes have you taken up this time? Are you going to dissolve DESA and DESCO and create something else?

IHM: No. I have got other formulas. In Dhaka, the cable TV operators use our poles and the consumers pay them the monthly rent on time, whereas the consumers don't pay their electricity bills for months. So I will have to evolve a system for regular bill collection. I will employ some private organisations for bill collection against a deposit. If they fail to collect the bills or miss payment for two consecutive months, I will forfeit the deposit. Thus I can ensure regular bill collection.

DS: But the question of paying the bills will arise only when the consumers get the electricity. Production has increased, demand has increased but what about the distribution?

IHM: Distribution has improved. I admit there is some load-shedding but it still is 30% less than the past. Had there been no accidents in the Ulan-Dhanmondi grid last month, there would have been no hue and cry about the power shortage. We reacted immediately, we brought foreign experts within three days, the fault was detected and it was repaired within the shortest possible time.

DS: Isn't there still power cuts in the city?

IHM: It's not power cut, it's disruption because of overloading. To reduce the overloading I need money, to be precise one thousand crore taka. With that amount of money I can assure you there would be no power cuts in Dhaka city in two years time.

DS: If money is the main problem then what is the government doing to get more money?

IHM: We are negotiating with ADB, World Bank. We also got an offer from China as soft loan repaying in 25 years. It has gone to the planning commission, if it's approved then we would begin negotiating with all of them soon.

PDB is a financially sick organisation, but who made it sick? The operational hazard and unaccountability. I want to make the organisation transparent. All the power stations are sending me accounts of how much electricity they have produced, how much money they have spent.

DS: Has the corruption decreased?

IHM: Yes, it definitely has. Now my collection is all time high. When I took over, DESA's monthly collection was 98 crore taka, now it's 178 crore. Load shedding is almost half in Dhaka.

DS: And the rest of the country?

IHM: There it's more than half. Yesterday (Tuesday) there was no load-shedding in Bangladesh. Whatever power cuts there were, it was due to technical faults. That I can't solve so soon. Don't forget Dhaka has grown rapidly in recent time, but not enough money has been invested in the power sector. But at least we are going from bad to a better position.