The roadmap for energy sector must be changed
The problems in the energy and power sector have not accumulated over just 15 years. It began in the early 1980s. At the root of the problem lies the neo-liberal ideological approach that since then turned the power sector into a profit-making enterprise for a handful of local and foreign businesses. The alternative approach is fundamentally different—where access to energy and power should be a public right, and resources kept in public ownership and not privatised or turned into private businesses. Under the alternative approach, essential services such as affordable electricity, gas, and water become available for all without discrimination.
In the early 1980s, the World Bank, in the name of development, recommended the neo-liberal reform of the energy sector, suggesting that foreign investment should be brought in. Their logic was that foreign investment would lower electricity and gas prices, reduce financial loss and waste, and increase efficiency through technology transfer. Reform started in the 80s along with structural adjustment programmes in the economy, and the signing of production-sharing contracts with multinationals began according to this roadmap—the first round in 1993, and the second round in 1997. Although the governments during those periods were different, the nature of the policy remained the same and the trend continued even during the regimes that came to power after 2000.
For all latest news, follow The Daily Star's Google News channel. However, after a while, the World Bank's argument about the benefits of privatisation and foreign investment in the energy sector proved to be wrong. We saw gas prices rising, loss/subsidies/wastage increasing, power tariffs increasing, and the prices of other essentials escalating on a regular basis. Furthermore, we did not see technology transfer and capacity development. Rather, the opposite happened. Foreign companies' negligence—the US company in Magurchhara and the Canadian company in Tengratila—caused big explosions in our gas fields. They destroyed natural gas that could have generated power for almost 18 months, and we still haven't received appropriate compensation for that.
During the last regime, foreign investment and privatisation in the energy sector increased further. In 2010, a new law was passed that essentially made the contracts and the contract processes free from any accountability, meaning these contracts and the companies involved could not be questioned or taken to court. This legal indemnity made them untouchable. It became clear that the intentions behind these policies were not in the public interest. When we were told that the reason for this indemnity law was to tackle huge load shedding by establishing "quick rentals," we proposed alternative solutions that would not require "quick rentals." But the government did not show any interest in accepting the cheaper, sustainable solution that would use public-sector plants. They opted for the costly, unsustainable option only to give business to well-connected groups.
The past government took an irrational and aggressive path with regard to the "Power System Master Plan" (PSMP) prepared by the Japan International Cooperation Agency (JICA), which prescribed coal, nuclear energy, and imported LNG—all heavily import-oriented, requiring loan and reliance on foreign companies, including Japanese ones, which benefited from this plan. Since 2011, the construction of coal-fired power plants by companies from India, China, and Japan began all along our coast from the Sundarbans to Cox's Bazar. The coastal area is extremely vital for the country's defence against natural disasters; it is also one of the most vulnerable regions to natural disasters, environmental damage, and climate change. However, the government and the investors totally ignored this fact and began weakening the defence system of the coastal region including the Sundarbans, the largest mangrove forest in the world.
For instance, the $12 billion megaproject for Rooppur nuclear power plant was started in early 2010 by taking a huge loan from Russia and awarding the project to Russia's state-run atomic agency Rosatom. However, people were not informed about the extreme consequences and risks associated with such a plant. There are layers of protection needed against the dangers of a nuclear power plant, considering that this could put the lives of almost 10 million people at risk.
All these megaprojects, especially the coal and nuclear power plants, suffer from irregularities, high corruption, and a lack of transparency. Plus, they initiated surveillance against dissenting opinions. It is easy to see that these plants were not built to generate electricity. There were much better alternatives. Nevertheless, these projects were pursued by the authoritarian government to bag huge commissions for policymakers and profits for a select few. Moreover, the past government sought to stay in power without people's mandate, so they relied on, among other things, international support from some foreign countries. To sustain that support, the government allowed these countries to launch those costly and environmentally harmful megaprojects. As a result, the energy and power sector has now become a huge financial burden for the whole economy and a significant source of environmental damage.
In contrast to the government's approach, we, as part of the people's movement, had developed a real solution for the sector taking the help of independent experts at home and abroad. We prepared an alternative master plan in 2017, where it was explained that there was no need for expensive LNG, dirty coal, or dangerous nuclear power. Our findings showed that our needs could be sufficiently met by focusing on gas exploration onshore and offshore and making real efforts to develop renewable energy. The steps would not require much time and resources to empower BAPEX and build public institutions for renewable energy. We recommended clear plans to utilise a large number of university students graduating every year for this purpose. We need to increase our own capabilities to bring down import costs, reduce pressure on foreign reserves, and boost our confidence and pride as a nation.
To steer toward the right direction, we must put an end to the destructive journey we have had thus far. The interim government should start scrapping projects like Rampal, Rooppur, and Banshkhali. Some may argue about the financial loss if these projects are scrapped. However, my estimates show that the costs of discarding these projects are lower than the costs of keeping these projects active. These projects will endanger Bangladesh's existence. Thus, continuing them will not only be a financial burden but also jeopardise the safety and security of the country.
Finally, this sector as well as the economy require a fundamental shift in policy framework to ensure public ownership, increase the capability of public institutions, and create the space for active public roles to build a better future in the public interest. The government must move away from import-loan-foreign company-dependent projects and adopt a cheaper, environment-friendly, and sustainable roadmap with public interest—not corporate profit—as the decisive force.
Anu Muhammad is former professor of economics of Jahangirnagar University.
Views expressed in this article are the author's own.
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