Power sector is corrupt to the core

Energy crisis. Foreign exchange crisis. Cost of living crisis. Over the past few weeks, these terms have become part and parcel of our regular vocabulary. One thing that connects all these crises – besides the massive suffering of ordinary people – is how those were made inevitable by corruption and mismanagement. A big part of the blame goes to the energy sector, of course, which remains unaccountable. Interestingly, while trying to justify the recent record hikes in fuel prices, the government cited the need for adjustment with global prices but also the burden of subsidies given to the sector for the sake of citizens. But according to a recent research paper, which analysed the prices of electricity bought from 58 private plants between 2004 and 2017, these subsidies have not been used for the benefit of citizens, but rather for corporations.

In fact, uncompetitive deals and collusive investing from politically connected investors have cost the taxpayers an estimated USD 1 billion a year in subsidies. The extent of irregularities revealed by the study is truly upsetting, especially when one considers the current state of the economy and where it would stand had those irregularities not been allowed. Reportedly, Bangladesh Power Development Board bought electricity from some power plants at a price 25 percent higher than that of identical plants! Leasing of government land in the form of subsidy to some plants led to a 15 percent rise in power prices. Also, the more expensive plants received orders before their lower-cost counterparts, and received gas as a priority too.

And the cherry on top of this rotting cake? The government set up contracts with the high-cost rental power plants in such a way that if they were not given orders, they would still be paid for 60 percent of the power they could have produced (capacity charge), meaning these plants would actually end up making more profits if they did not generate power.

This highlights the need for competitive bidding which, experts say, would reduce plant-level prices by as much as 26 percent. But we must ask: Can we trust the relevant authorities to take effective action to prevent irregularities when, for so long, the energy sector has been simply a playground for the politically connected individuals and firms to increase their wealth? Can a corrupt system deal with corruption? Unfortunately, the rot has spread so far and wide that the Parliamentary Standing Committee on Public Undertakings recently expressed "shock" at the extent of financial irregularities at the Bangladesh Petroleum Corporation, another agency under the same ministry. The failure to rid these vital state institutions of corruption and mismanagement is totally unacceptable.

The higher authorities must accept responsibility for this chronic failure, and must establish accountability in the power sector. Those in charge cannot continue to ignore people's plight while the corrupt exploit systemic loopholes to advance their own interests.