The government can cut subsidies without raising energy prices, as prescribed by the International Monetary Fund, the Consumers Association of Bangladesh has said.
To back its claim, the association has proposed 13 recommendations, including focus on transparency, frugality and effective management.
CAB‘s Energy Adviser M Shamsul Alam said at a press conference on Thursday that an IMF team visiting Bangladesh under its loan programme recommended adjusting supply costs by raising prices to withdraw subsidies from gas and fertiliser during a meeting with Finance Division officials on Apr 25.
“They have advised using the money from the subsidies in social safety programmes. The Finance Division said the government will give sufficient subsidies to agriculture, keeping in mind food security. It is understood that they are not considering energy security.
“Don’t they understand that food security can’t be ensured without energy security? We think it is possible to withdraw subsidies without raising energy prices,” Shamsul said.
He described the exorbitant cost of energy supply as “looting” and said the IMF did not recommend putting an end to such malpractices in the sector, which could save Tk 400 billion.
“The IMF will never do it because it is setting a loan trap for the government to turn Bangladesh into an import market of power and fuel,” he alleged.
The CAB adviser predicts the government will soon raise power prices. “People will be plundered. They will never get energy justice.”
Shamsul said many countries sank under loans from the World Bank and the IMF, but there is no example of any country being saved by lenders’ credit programmes.
“Please do not overburden people to meet their [IMF’s] conditions. You’ve [government] done this wrong many times, but don’t repeat it.”
CAB President Ghulam Rahman said the IMF should not have recommended raising energy prices without examining if there were any alternatives.
Former Dhaka University Professor MM Akash, and Prof Ijaz Hossain, a former teacher of the Bangladesh University of Engineering and Technology, also spoke at the press conference.
The 13 recommendations by CAB are:
- Any non-competitive investment in power, energy and renewable energy sectors should be prohibited by law.
- The Electricity and Energy Supply Act of 2010 and clause 'A' of section 34 of the Bangladesh Regulatory Commission (BERC) Act of 2003 should be removed.
- The Gas Development Fund, Power Development Fund and Energy Security Fund should be treated as consumer equity investment, and not debt for BAPEX's gas exploration, PDB's power generation and energy import.
- More than 50 percent of electricity and gas generation on cost basis without profit must be owned by the government. Government will provide electricity-fuel services only on a cost basis, not cost plus.
- The proportion of LNG, coal and oil in the primary fuel mix should be reduced in short and medium term plans. Import costs should be reduced by controlling the import of electricity and energy by increasing own gas exploration and reserves and renewable power generation.
- It should be ensured that the government does not engage in joint ownership of power and energy business with the private sector and does not transfer shares of owned companies to the private sector. The second oil refinery should be solely owned by the government and not with S Alam Group.
- Bureaucrats of the power and energy sector should be withdrawn from the boards of all public and jointly owned companies in the power and energy sector.
- The activities of companies or organisations of both sectors should be managed independently with their own technical manpower. In that case, the ministry should be limited to formulating rules and policies following the laws and regulations, administrative supervision in implementing the regulatory orders, and ensuring the accountability of the certificate holders. And BERC as a regulator should be proactive, independent and impartial.
- Receipt of compensation, not loans, from related sources, including the Climate Fund, must be ensured. Legislation should ensure investment in capacity building of the affected people with the compensation and expansion of renewable energy markets.
- Laws, regulations and plans for electricity, fossil fuel and renewable energy development policies must be consistent with the Paris Agreement on climate change.
- All contracts for power and energy development should be model contracts approved by legal process.
- Already executed supplementary agreement between Bapex and Santos for drilling of Magnama-2 exploratory well, supplementary power purchase agreement between REB and Summit Power, supplementary power purchase agreement of Meghnaghat Power Plant between PDB and Summit Power, power purchase agreement executed between PDB and Adani are all against public interest. The contracts must be cancelled. The government should refrain from signing the 1994 Energy Charter Treaty.
- An Energy Price Stabilisation Fund should be formed to control the increase and decrease in the prices in order to protect energy security.
