Electricity crisis: whom to blame?
Electricity crisis is shaping up to be the defining political issue in Bangladesh. That’s a good thing, because energy shortage is among the most important bottleneck facing the country’s economy. It’s far better that politics reflect economic priorities than futile debates about dead men’s place in history.
Of course, politics being what it is, it’s inevitable that there would be blame games. The Awami League government blames the past two governments for the current energy crisis. According to the government account, electricity wasn’t added to the national grid under the BNP and 1/11 governments. Meanwhile, about a year ago the opposition leader asked the government to resign if they couldn’t deliver electricity.
So, whom to blame? Fortunately, unlike endless debates about people’s place in history, we can actually look at the data to decide where the responsibility lies for the electricity crisis. Short answer:
- it was under AL, from late 2000, that electricity generation slumped — so they can’t escape blame; but
- BNP deserves most blame because they couldn’t revive the sector until late 2003; and
- the most recent slump started under the 1/11 regime.
Long answer: over the fold.
Note that I don’t take a position on the policy options to solve the crisis — that discussion requires technical knowledge that I don’t have.
The regular reader wouldn’t be surprised to see a bunch of charts. :-) Good people at CEIC Asia database provides monthly data since July 1993. Unfortunately, the data is available with considerable lag, and the latest datapoint is April 2009.
This first chart shows electricity consumption and net generation. Two things stand out: there is a strong seasonal pattern; and it seems net generation is keeping pace with consumption, so one can wonder what the big deal is.
The seasonality problem is fixed by taking a 12 month moving average. Net generation requires explaining. Net generation is defined as:
Net generation = Gross generation – Station Service and Own Use + Individual Power Production
Gross generation is what is produced at the power plants. Station Service is a fraction (about 5-6%) of gross generation that is used in running the plant. Individual Production is what comes out of private generators. The chart below shows the smooth version of all these components.
Two things are evident: individual power production took off between 2000 and 2003; and gross generation slumped around the same time. Governments cannot take any credit for the electricity that comes out of people’s private generators. In fact, one could argue that those private generators are needed because the power plants adding to the national grid fail to do their job.
For our purposes, the series to look at is the gross generation. Suppose gross generation grew by 6% a year — this would mean electricity keeping pace with the economic growth we have experienced in the past decade. In the chart below, the green dotted line shows this hypothetical generation. The difference between this series and the red actual is the gap or deficit that’s behind the current crisis.
In the 1990s, gross generation actually grew faster than 6% a year, and the red line was above the green line. In fact, when the Awami League came to power in June 1996, by this measure they had a 4% surplus electricity. They maintained the surplus until the end of the decade. But something clearly happened around November 2000, and gross generation slumped. When BNP took power in Ocotober 2001, it inherited a 5% electricity gap.
Here is then the first round of blame: AL left BNP with a 11 month long slump that resulted in a 5% deficit in electricity.
Then the slump worsened in BNP’s first two years. In October 2003, when the generation hit its nadir, our power plants were producing the same level of electricity they generated over five years earlier! Things improved thereafter, and for the remainder of BNP’s term generation grew at 7.5% a year. But this wasn’t enough to close the gap that had already opened up. The October 2001 level of production wouldn’t be reached until August 2005. The November 2000 peak wouldn’t be crossed until January 2006. When BNP was kicked out of office in January 2007, the electricity gap stood at 22%.
Here is the second party for blame: BNP left office after widening the deficit by 17ppt. Sure, the AL’s claim of ‘BNP not adding a single kw’ isn’t literally true. But the underlying story isn’t false either.
However, in its defence, BNP did start a turnaround. Look what happened under the 1/11 regime. In its two years together, gross generation grew by barely 2.1%! The gap widened by another 7ppt to 29%. If you blame BNP for ‘not adding anything to the national grid’, spare some of your wrath for the good gentlemen who ran the show after Iajuddin was shown who the boss was.
Thus, when AL took office again in January 2009, the gap was 29%. When our series ends in April 2009, the gap had widened to 30%. Judging by the continued crisis, the gap hadn’t substantially closed in the past year.
In a sense, this kind of chartwaving misses the point. AL is in power now, and it ‘owns’ the electricity problem. To its credit, it has repeatedly promised, with quantifiable targets, to end the crisis before it faces re-election. Regardless of what had come under BNP and the 1/11 regime, AL will be held to account on these promises. And they should be.
But it’s also the case that they had been dealt a rotten hand by both BNP and the 1/11 regime — something we will all do well to remember.