Summit is very keen for a private power transmission and distribution policy, he says in an exclusive interview with The Business Standard
The country’s leading figure in private power generation, Muhammed Aziz Khan, believes that Bangladesh needs a new strategy for fast industrialisation to ensure a double-digit growth, in the light of achieving electricity surplus.
This double-digit growth will create employment for the huge masses coming into employable age, he said.
“Bangladesh needs to employ its labour force for productive purpose as well as to avoid social unrest and enhance quality of life. This can be achieved through massive industrialisation,” said Aziz Khan, chairman of Summit Group that produces 1950 megawatt power – which is more than 10 percent of the electricity produced in the country.
But referring to the banking and share market situations, he said, “One of the weak spots of this journey is the money market and capital market of Bangladesh.
“I strongly feel that the monetary and fiscal authorities will consider the requirements of an industrialised Bangladesh and make policies accordingly and implement them.”
The context of power generation has drastically changed between 2008 and 2018. “Energy demand rise in Bangladesh is phenomenal,” he said.
A decade ago, the country rolled out huge power projects to feed the unmet demands of the country. That phase is over as the country now has a generation capacity of 18,000MW – while customers need up to 13,000MW.
With a series of mega power projects coming up later this year, there is a concern that without customers growing adequately the sector will land in a financial mess. Power plants would lay idle and the government will have to pay them huge penalty.
But Aziz Khan sees no reason to be worried about the lack of demand against surplus supply. “The current temporary excess generation capacity is very temporary,” he noted, adding that demands grow in curve and supply grows in chunks.
The per capita power consumption in the country is still lower than that of India, Pakistan and Sri Lanka. This shows the suppressed demand which has not been provided with electricity due to a lack of transmission, distribution and industrialisation.
“The way Bangladesh’s other infrastructure such as the metro rail project is progressing, the day it comes into operation, it will need bulk power supply,” he said.
Aziz Khan suggested that since electricity would be widely available in the next decade, the government should consider introducing electric trains, replacing the costly and environmentally hazardous diesel-based rail operation.
“They can easily introduce electric train in the Dhaka-Chittagong route for the sake of environment and cost,” he said.
The government has authorised 100 economic zones. A massive amount of electricity will be needed for their operation.
Massive industrialisation needs infrastructure such as electricity, port and internet.
“The government was right in enhancing power generation, building ports at Matarbari, Payra, and Bay terminals in Chittagong,” Aziz Khan noted. “The government has provided support in laying fibre optics across 55,000 square miles of Bangladesh. I am looking for the day for 3G to jump to 5G. From Chittagong port to four ports with two deep-sea ports.”
This kind of ongoing infrastructure projects would pave way for massive industrialisation – provided that the government takes up an appropriate policy.
What’s next for Summit?
On Summit’s part in the next decade, it would like to continue expanding its power generation capacity by 10 to 15 percent of the country’s generation.
Summit is very keen for a private power transmission and distribution policy – which is now a government monopoly. “The private sector brings in efficiency. The private sector is one of the best allocators of funds – for its own requirement of making profits,” he added.
“Bangladesh imports substantial amount of petroleum products and LNG and will import coal in immediate future. In my view, all these should be open to the private sector as the government is less efficient in business and even less in trading transactions compared to the private sector.
“One may wonder why vegetable oil consumed by humans can be imported by the private sector but not energy products consumed by electricity or industries by the same private sector.
“The government’s job is to regulate and facilitate, enable and allocate budgetary resources,” he said.
He added that natural gas demands will continue to increase by about 12 percent annually – or 350 million cubic feet per day (mmcfd).
“The challenge in the power sector is how to be efficient now that we rely on imported energy; how to be productive and provide optimal electricity at reasonable price to everyone in Bangladesh.
“Primary energy remains a challenge. If we must be concerned, it should be about the environmental aspect of primary fuel. We will have to rely on natural gas and LNG and pursue further production of our own gas,” said Aziz Khan.