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Scrap, amend key energy laws, demand energy experts
The reform that Bangladesh now seeks to establish the rule of law following the ouster of Sheikh Hasina ending her autocratic rule should begin with scrapping and changing the...
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Scrap, amend key energy laws, demand energy experts
Emran Hossain 18 August, 2024, 00:23
The reform that Bangladesh now seeks to establish the rule of law following the ouster of Sheikh Hasina ending her autocratic rule should begin with scrapping and changing the key energy laws, energy experts said.
In the last 14 years, they said, until Hasina’s fall on August 5, the Awami League government made almost all power and energy deals behind the scene under the protection of an indemnity law named ‘Quick enhancement of electricity and energy supply act, 2010’.
The law handed unprecedented power to the minister for power and energy, which was Hasina herself, enabling her to award power and energy deals without any tender while ensuring that her decisions could not be challenged in any court of law.
The law came to be known as the indemnity law which was enacted in 2010 for two years. Its tenure was later extended four times, giving it a lifetime of 16 years until 2026, ignoring widespread demands from energy and legal experts for throwing it out.
The law oversaw unabated fossil fuel expansion at exorbitant prices further facilitating corruption and inefficiency, channeling a huge amount of public money into private pockets by creating a power system suffering from 50 per cent overcapacity.
‘The cancellation of the indemnity law should be the first step in the reform of the state,’ said Hasan Mehedi, member secretary, Bangladesh Working Group on Ecology and Development.
The call for reform emerged with the uprising that toppled the Hasina regime.
The ‘Quick enhancement of electricity and energy supply act, 2010’ was passed on October 12 in 2010 for two years as an emergency measure to tackle an acute energy crisis after the past Awami League government had assumed power in 2009.
In 2012, the law was given two years’ extension, followed by four year’s extension awarded in 2014, three years extension in 2018 and five years extension in 2021.
The law allows awarding any companies without tender any power and energy projects, including the import of natural gas, coal, liquefied natural gas and petroleum products, as well as the extraction of mineral resources. The law also covers electricity generation, transmission and distribution projects.
In the section 9, the law states that the legality of any activity or measure or order taken or given under it cannot be challenged in any court of law.
No legal action can be taken against any employees and officials who have operated under the law or its subordinate rules or any general or special orders given under it, states section 10 of the law, considering all actions done under it performed in good faith.
Emran Hossain 18 August, 2024, 00:23
The reform that Bangladesh now seeks to establish the rule of law following the ouster of Sheikh Hasina ending her autocratic rule should begin with scrapping and changing the key energy laws, energy experts said.
In the last 14 years, they said, until Hasina’s fall on August 5, the Awami League government made almost all power and energy deals behind the scene under the protection of an indemnity law named ‘Quick enhancement of electricity and energy supply act, 2010’.
The law handed unprecedented power to the minister for power and energy, which was Hasina herself, enabling her to award power and energy deals without any tender while ensuring that her decisions could not be challenged in any court of law.
The law came to be known as the indemnity law which was enacted in 2010 for two years. Its tenure was later extended four times, giving it a lifetime of 16 years until 2026, ignoring widespread demands from energy and legal experts for throwing it out.
The law oversaw unabated fossil fuel expansion at exorbitant prices further facilitating corruption and inefficiency, channeling a huge amount of public money into private pockets by creating a power system suffering from 50 per cent overcapacity.
‘The cancellation of the indemnity law should be the first step in the reform of the state,’ said Hasan Mehedi, member secretary, Bangladesh Working Group on Ecology and Development.
The call for reform emerged with the uprising that toppled the Hasina regime.
The ‘Quick enhancement of electricity and energy supply act, 2010’ was passed on October 12 in 2010 for two years as an emergency measure to tackle an acute energy crisis after the past Awami League government had assumed power in 2009.
In 2012, the law was given two years’ extension, followed by four year’s extension awarded in 2014, three years extension in 2018 and five years extension in 2021.
The law allows awarding any companies without tender any power and energy projects, including the import of natural gas, coal, liquefied natural gas and petroleum products, as well as the extraction of mineral resources. The law also covers electricity generation, transmission and distribution projects.
In the section 9, the law states that the legality of any activity or measure or order taken or given under it cannot be challenged in any court of law.
No legal action can be taken against any employees and officials who have operated under the law or its subordinate rules or any general or special orders given under it, states section 10 of the law, considering all actions done under it performed in good faith.
After taking permission from the minister, the subsection 2 of the section 6 states, a special committee can contact and negotiate with a limited number of parties or a single party to process any procurement or investment proposals in the power and energy sector.
The special committee comprising top officials of the energy ministry and the state-owned power end energy entities.
Under the law, the government indiscriminately approved projects, increasing the installed power generation capacity to over 28,000MW in June this year from less than 5,000MW in 2009.
Energy experts frequently said that the rapid expansion of the power generation capacity was unnecessary and harmful and based on flawed growth projection.
The power projects offered riskless investment, guaranteeing huge profits, with capacity charge entitlement, which is a provision to pay investors regardless of power produced by their power plants.
‘The law should not have existed in the first place. It violates standard practices of public procurement around the world,’ said energy expert Ijaz Hossain.
He said that the government has a tough choice to make about holding the past Awami League government accountable for projects implemented under the indemnity law as it implies dealing with international power purchase agreements.
‘The move might bear financial consequences for some parties might choose to go to international courts,’ he said.
The mass uprising, however, has offered an opportunity as well exposing the past government’s acts against the interest of the state and people, giving the interim government the opportunity to renegotiate terms and conditions in existing power and energy deals, said Ijaz.
The past government under the law set up 151 power plants, including dozens of furnace oil, diesel, coal and gas-fired power plants, and two floating, storage and re-gasification units. Drilling of a dozen of onshore gas-wells by local and international oil companies were also conducted under the law. Oil-carrying pipelines were also installed, among other initiatives.
Not a single power and energy agreement was ever made public. The Awami League government also kept all environmental impact assessment a secret.
An analysis of the power projects passed by the Awami League showed that only one power project went through bidding since 2010. The bid, however, carried no significance for its winner was paid higher price through negotiation anyway.
Another result of having such a law is evident in the establishment of the Bosila 108MW power plant, owned by CLC power company, a sister concern of Maisha Group, owned by former Awami League lawmaker Aslamul Haque, who died in 2021. The furnace oil-based Bosila power plant began commercial operation on February 22, 2017, years after it was supposed to be operational. The power plant was set up encroaching river for which it was never made accountable. And the power plant was out of operation for the last four years but its permission was never cancelled.
Consumers Association of Bangladesh energy adviser Shamsul Alam said that the new government should suspend the indemnity law and amend the Bangladesh Energy Regulatory Commission act to ensure people’s right to public hearing before energy price hikes.
The past Awami League government turned the regulatory commission a lame duck in 2022 since when electricity and gas prices were frequently increased under executive orders.
Shamsul Alam demanded that the commission should work to reduce inefficiency and corruption to ensure uninterrupted energy supply without increasing prices.
‘The interim government should first announce that energy prices will not be increased during its tenure and then ensure it through reforms or providing subsidy,’ he said.
