A crime against ordinary people

New Age

THE government's decision on Sunday to borrow $2 billion from an autonomous wing of the Islamic Development Bank at an interest rate of more than 5 per cent — presumably to back the private sector quick rental power plants — is tantamount to one of the greatest economic crimes committed by any government on the people in Bangladesh. According to a report front-paged in New Age on Monday, a meeting of the hard-term loan committee decided to go for the country's single biggest hard-term borrowing against a backdrop of a falling foreign exchange reserve and dwindling project aid disbursement by multilateral development partners. The government will have to pay back more than half the amount in six months, at an interest of 5.3 per cent, and the rest in nine months at 5 per cent. When almost every single economic indicator is on a downward spiral, and investment and employment generation stagnant, the decision to mount the economic burden of ordinary people could very well be compared to sounding the death knell to the national economy. What is more infuriating is that the government is piling this unbearable burden to cover for their dishonest decisions with regard to financing the hugely expensive quick rental power projects.

In 2009, when the Awami League-Jatiya Party government came to power, it did inherit an acute power crisis left behind by the previous BNP-led four party alliance government. The government has so far managed to add 1,950MW to the 4,000MW left behind by the BNP-led government and the military-backed government of Fakhruddin Ahmed. However, because of poor maintenance, power production from state-owned companies has fallen by 1,400MW. Of the 1,950MW, 1,088MW come from the furnace oil and diesel-run rental power plants (RPP), 16 of which are already in operation while 19 are still on the way. Per unit of power from RPPs come at a price of Tk 13, as opposed to Tk 2 from state-run plants, and naturally, to finance this huge jump the government has already spent Tk 3,028 crore in the last fiscal as subsidy to RPPs and another Tk 1,237 crore in just the first two months of this fiscal. To cut subsidies, the government has hiked the prices of electricity, diesel, kerosene, CNG and furnace oil, between 25.5 per cent to 131 per cent. In three and half months of the present fiscal, the government finished up their budgetary target of borrowing from commercial banks, leaving the banks facing a severe liquidity crisis. RPPs meanwhile run on diesel and furnace oil, and the government import of fuel oil has gone up by 28 lakh tonne, causing a huge rise in import bills, which in turn has led to a rise in price of the dollar. From Tk 71 in July 2010, the price of dollar went up to Tk 82.60 in December 2011.

The country is on the verge of an economic meltdown with dwindling foreign exchange reserve, spiralling import bills, galloping price inflation and all to finance the 35-odd rental power plants. The government practically sat on power generation, one of its five priority agendas in the electoral manifesto, in the first two years of its tenure, allowing to crisis to deepen. Then, on the excuse of the crisis, the government pushed through an indemnity act through parliament in 2011, which allowed them to hand over the RPPs without tender and above scrutiny to their 'favoured' firms. It now appears that to keep these RPPs going, ordinary people will not just pay through spiralling prices, lack of bank loans and loss of jobs and other economic activity, but will also have to further carry the burden of one of the steepest loans in Bangladeshi history. It is indeed tantamount to a grievous crime committed by the government on the people who voted them to power. Such crimes need to be protested against effectively.

Govt to borrow $2b for fuel oil import

New Age

Shakhawat Hossain

The government on Sunday approved hard-term borrowing of around $2 billion to ensure uninterrupted import of fuel oils, consumption of which has soared substantially by the oil-guzzling quick rental power plants, said officials concerned.

A meeting of the hard-term loan committee headed by finance minister AMA Muhith was held at the finance ministry in the morning to decide on an Energy Division proposal for going for the country's single biggest hard-term borrowing, they said.

Prime minister Sheikh Hasina's economic adviser Mashiur Rahman, Bangladesh Bank governor Atiur Rahman, and secretaries to the ministry of finance, Internal Resources Division, Economic Relations Division, and Energy Division were present in the meeting.

The loan at an interest of more than 5 per cent will be taken from the Islamic Trade and Finance Cooperation, an autonomous wing of the Middle East-based Islamic Development Bank.

Of the amount, $1,130 million is to be refunded in six months with an interest of 5.3 per cent and the remaining $870 million in nine months with an interest of 5 per cent.

Last year, the government borrowed $1,400 million from the IDB at 5.3 per cent interest for financing fuel oil imports.

Energy Division officials said the country was desperately seeking loans in foreign currency to keep up uninterrupted import of fuel oils against the backdrop of a falling foreign exchange reserve and dwindling project aid disbursement by the country's multilateral development partners.

They said the annual oil import bills, which was hovering around $1.5 billion a couple of years back, crossed $4 billon in the just-concluded calendar year for running the costly fuel oil-fired power plants.

The projected fuel oil import cost this calendar year will be around $4.5 billion as the country needs to import around 6.8 million tonnes of fuel oils.

The cash-strapped Bangladesh Petroleum Corporation, the lone state-owned fuel oil importer, is already finding it hard to keep up fuel oil import.

BPC chairman Abu Bakar Siddique in a letter informed the Energy Division and the finance ministry in last week that two state-owned

commercial banks had refused to open letters of credit for importing fuel oils.

The BPC chief apprehended that any disruption in oil import might hamper irrigation in the current dry season that yielded the country's biggest cereal crop, Boro.

He also pointed out that uninterrupted import of fuel oils was needed for generating power to deal with the nagging load-shedding.

Private companies have already set up 16 rental and quick rental plants with a total production capacity of 1,372 megawatts of electricity. Nineteen more plants with a total generation capacity of 2,120MW power will come into operation this year. Most of the plants run on furnace oil and diesel.

According to the BPC chairman, almost half, or 3.2 million tonne, of diesel and furnace oil to be imported in the current year will be consumed by the rental power plants.

Desh-Bondhu,
'Desher Kotha Bolay'