Budget for FY2014

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Abdullahil Mamun Assistant Professor of Economics

Department of Business Administration,

International Islamic University Chittagong,

Bangladesh.

Power and Energy Sector

Power and Energy Allocation to Power and Energy

ADP allocated : Tk. 11,308 crore

Non-development budget: Tk.43 crore

Total allocation: Tk. 11,351 crore

13.6% more than FY2013 (revised)

Power sector receives: Tk. 9,060 crore

Energy sector receives: Tk. 2,291 crore

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Actual Allocation 4285 4586 4341 4310 6,114 8,311 9,544 11,351

Revised Allocation 3034 3585 2909 3786 7,256 7,957 9993

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Allocation to Power and Energy Sector

Presently Scenario

Access to electricity: 53%

Per capita generation: only 272 kwh

Installed generation capacity: 8625 MW

Actual generation: 6066 MW (70.33%)

Budget Revision and Implementation is a Major Concern

The proposed allocation marked negative revision almost in all years

In FY2013, there is also an upward revision, utilization is still uncertain

For FY 13, revised ADP allocation will be 90.6% of proposed ADP, of which only 75.5%

will be implemented. Unnayan Onneshan (2012) 2

Reduction of custom duty on solar lantern and LED lamp is appreciable It will help access by low income group people It will reduce kerosene subsidy

But the objective will remain unrealized unless power generation capacity is improved. In FY12, only 70.33% (6066 MW) of installed generation capacity was produced Our actual generation fails to meet the installed generation capacity over the years

(see figure) Therefore, load-shedding has increased over the years.

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2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Installed and Actual Power Generation Capacity

(In MW)

installed generation capacity actual generation

Power and Energy

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Government’s Plan in Budget

Implement a total of 54 project

5 will be completed in FY2014 with capacity of 1480MW

Reality

On an average 72% of our installed generation capacity is achieved (CPD, 2012).

Reasons

A good number of generation units have become very old

They have been operating at a much-reduced capacity.

Their reliability and productivity are also poor.

Actual demand could not be met due to shortfall in available generation

capacity.

Due to shortage of gas supply some power plants are unable to reach their

generation capability

A good number of them are dual-fuel nature, it increases cost (subsidy)

Power and Energy

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Experience of quick rental and peaking plants

the additional cost for FY 2011-12 to refuel the quick rental and peaking plants

was

between Tk. 5200 crore and Tk. 5600 crore

about 0.6 percent or 0.7 percent of the GDP

Government provided a huge amount of money as subsidy

(Energy Bangla, 2012)

Challenge for the Government

Budget proposes Tk.5500 crore (48.5% of power and energy sector budget)

subsidy for continuing those projects. Thereby, it would undoubtedly be very

challenging for the government to implement the ongoing projects with the rest

51.5% fund.

Do’s

The government needs to be creative in renewing and revising strategic

approaches to reduce the power crisis.

Separate allocation for the maintenance, renovation and modernization of age

old power plants is urgently needed

Use the plentiful coal deposit that will create an opportunity in solving the

power crisis with the desirable speed.

Power and Energy

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