Professional Documents
Culture Documents
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1 INTRODUCTION
S.M.FerdousiscurrentlyworkingasaLecturerofEEEdepartmentinAmer
icanInternationalUniversityBangladesh.
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experiencedsomeremarkablechangesintheirmanagement&
administrationsystem.Thiswasfairlyassistedbyfactorslike
postwardevelopmenteuphoria,socialwelfare,equity,justice,
belief in the role of electricity in development, realization by
the political parties of the electoral appeal of electricity, meet
the existence demand of the country, improvements in tech
nicalefficienciesofelectricitygenerationandperceptionabout
the responsibility of the government in promoting economic
development.A review of history suggests that electricity in
frastructurewasusedbythepoliticalpartiesinBangladeshto
promote their political agendas and hence to improve their
electoral prospects. During the 1990s, concerns began to be
expressed about the term efficiency in the electrical industry.
Therearefewcitedreasonsbehindsuchinefficiencies,namely,
systemloss,technicalloss,corruption,impropermanagement,
tariff system etc. Ensuring supply ahead of demand is the
idealsituationincaseofelectricityformeetingmanufacturing,
irrigation, commercial and domestic needs of any economy.
However, it was not possible to do so in Bangladesh. For the
last few years, actual demand could not be supplied due to
shortage of generation capacity. The operational capacity was
againinterruptedbyoccasionalpoweroutagesowingtofluc
tuations in gas pressure, transmission and distribution faults.
These caused enormous losses to industrial production and
commercialactivities.Hencetraditionalviewonthecontrolof
industry by the technical experts only came under serious
challengeduetothesocial&politicalclimatechanges,public
awareness,equityandjusticeissues.Thepoliticianstookthese
measures as an opportunity to improve their credentials as
effective economic managers and their vote banks eventually.
Ontheotherhand,thetechnicalcluster viewstheseconcerns
as an openings to undertake strategic initiative to improve
their image and to ensure their longer term survival. Conse
quently,anumberoflegislativeandnonlegislativemeasures
focusingmainlyonimprovingefficiencies,bettermanagement
andcontroloftheindustryweretakenbythegovernmentsto
reformtheelectricityindustry.Atthesametimetheelectricity
utilitiesalsotookanumberofreforminitiativescomprisingof
independentenquirestoreviewindustryperformance,devel
opingaccountabilitycriteria,tighteningthescrutinyofindus
tryplansetc[5,6].
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4 MISMATCHED AGENDAS
There are emerging evidences that reform has been designed
to mainly address economic and, in particular, financial con
cerns with insufficient consideration for social and environ
Source: [30].
It is certain that, any removal of subsidies on the electricity
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4.2 Employment
The electricity industry is also a source of employment, and
giventhatoneofthemajorchallengesfacingdevelopingcoun
triesistheeverrisinglevelofunemployment,reformcanonly
be beneficial if it creates rather than eliminating jobs. Privati
zationhasalsobeenexpectedtoresultinjobcreation,higher
incomes and economic growth [12]. In reality, reform has ac
companied with retrenchments as a measure to cut costs and
increase financial efficiency. The number of utility customers
peremployeeisusedasameasureofperformanceefficiency,a
necessarystipulationforcountriesseekingconventionalmulti
lateral financing. The internationally accepted standard is
about160customersperemployee[13],butmanydeveloping
countries including Bangladesh have tended to have lower
ratiosandarethusconsideredoverstaffed.Withtheinitiation
of reform the customer/employee ratios are changing, as re
formers have been tasked with downsizing, particularly as a
conditionforattractingprivatesectorplayers.InCtedIvoire,
theoperations/managementcontractreformundertheprivate
sectorresultedinareductionofemployeespercustomerfrom
9.5 to 6.9 within a few years that is, one employee serving
0.14 customers [14], while Argentina experienced a 23% im
provementbetween1992and1998[15].Clearly,thereduction
of staff might be beneficial to the entrepreneurs, but is detri
mentaltotheemployeesandperhapstothecountrysmacro
economyaswell.Notably,whileononehandthesectorislay
ing off staff, on the other hand the new management has en
joyed significant and socially controversial large salaries [16].
This argument failed to establish position in the developed
country as well. For example, in Australia this reform also
showedadverseeffect.Atablehavingthenumberofemploy
mentintheelectricityindustryfordifferentstatesofAustralia
ispresentedbelow.
TABLE 2
EMPLOYMENT IN ELECTRICITY INDUSTRY.
Source: [17].
Thisinformationclearlyindicatesthedeclinationofthenum
ber of employee in the electricity industry since the onset of
reforms in the mid80s. The major concern in this table is
about Victoria where restructuring of the industry was ac
companied by its privatization, the number of employees
nearlyhalvedbetween1994and1998.Basedontheabovedis
cussion, for a country like Bangladesh it is obvious that, the
privatization of the existing government owned plants will
lead to lose jobs for many personnel. In this region unem
ploymentisoneofthecriticalproblemsthateconomyisfacing
andthisreformwilladdmorefueltotheexistingproblem.
4.3 Environmental
Theglobalenvironmentalproblemscannotbeoverstated.The
IntergovernmentalPanelonClimateChangehasdocumented
imminent climate change and advocated changes in energy
production and consumption patterns as a measure to curb
global warming.However,toembark on asustainable devel
opmentpath,developingcountrieswillhavetoincreasetotal
energy consumption. Clearly this trend has environmental
implications. In the course of their implementation, however,
powersectorreformshavehadsomenotoriousrepercussions,
whichhaveelevatedelectricitytoanissueofconcernatinter
nationallevelanddrivendevelopingcountriestoquestionthe
wisdomofundertakingreform.Thenecessityanddesirability
of reform is often taken for granted. Regarding the adverse
affect on environment for example, in case of Australia,
Transgrid (1998) [18] and ABARES (2000) [19] showed evi
dences that CO2 intensities have significantly increased over
theelectricityindustryreformperiod199495to199899.This
is widespread in many countries. Fortunately, the amount of
CO2 emissions by the power plants in Bangladesh is low for
the time being. The main reason for that is majority of the
powerplantsusenaturalgasastheirfuel.Butthecontinuous
growingdemandforelectricityforcedthegovernmenttoseek
for the alternative fuel and they are concentrating on furnace
oilandcoalmainly.Intheroadmapof2015,governmenthas
contracted almost 2600MW of coal fired plants in Chittagong
andKhulnaintheformofIPPandjointventure[20].Thisis
suewillcertainlyincreasetherateofCO2emissionsandhence
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ACKNOWLEDGEMENT
TheauthorwouldliketoexpresshisappreciationtoFakhrul
IslamandRifatRayhanforprovidingvaluableinputsforwrit
ingthispaper.Theauthoris,ofcourse,responsibleforthe
contents.
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