Govt to divert social safety net funds to renewable energy

PBbox

The government will divert half of the funds of two social safety net programmes to expand the thriving and expensive renewable energy business. Officials said a policy to divert 50 per cent of the annual budgetary allocation or more than Tk 300 crore, set aside for test relief and food for work programme, was at the final stage. A number of ministries and divisions like food, energy and finance have worked out the policy after the Prime Minister’s Office had issued a directive in this regard a few months back. The main reason for diverting the fund has been attributed to inertia of elected representatives in taking allocation under the two programme, because of difference between the government set price and market rates. The price difference was significant in recent years, forcing the government to go for alternative, said Sustainable and Renewable Energy Development Authority member Siddique Zobair. Diverting the allocation to home-based solar plants and bio-gas is one of the alternative options, he said. But a number of ministry officials suspect that businessmen selling alternative energy equipments and having good links with the ruling party would benefit mostly from the major policy shift of the government. The fund diversion would be made available for expansion of expensive power generation through solar plants, they said. The government has allocated 193,000 tonnes of rice and wheat under the test relief and the food for work programme in the current budget. The value, according to government price, is around Tk 667.08 crore. Half of the fund, or around Tk 333 crore, would now be repurposed for solar and bio-gas plants. Food ministry would pay the funds to the businessmen supplying solar panel and biogas projects, once the move is implemented. Its minister, Qamrul Islam, however, said it was not compulsory to use the 50 per cent allocation of rice and wheat for the solar panel and biogas projects. He said things would depend on demand. The ruling party has been criticized by many quarters for generating power from expensive fuel oil-based rental power plants. Consumers have to pay more than double for power price in the last five years after the government failed to implement less costly power generation options. Expensive rental power plants reportedly ate up 80 per cent of power subsidy despite supplying only less than 20 per cent of electricity to the grid. According to draft made by the Sustainable and Renewable Energy Development Authority, clients of the solar plants will pay 10 per cent down payment while 30 per cent would come from food ministry. Infrastructure Development Company Limited, which will implement the project, will bear the rest of the amount, 20 per cent of which will be given to its associates or equipments’ suppliers as equity and 20 per cent as loan to clients with the condition of repayment monthly, in two years time. Biogas plants will have to give 15 per cent down payment while 35 per cent will come from the test relief and food for work fund. The rest 50 per cent will be given as loan by IDCOL which is repayable in two years on monthly basis by the clients. PMO has endorsed the policy at a meeting on Thursday, officials said. World Bank, which is giving loan to IDCOL, said only 40 per cent of the rural households in Bangladesh have access to grid electricity. Even those connected to the grid faced frequent power cuts due to lack of generation capacity. It noted that only 7,000 Bangladeshi households were using solar panels in 2002. But now, about 2 million low-income rural households have solar power plants. Since 2009, more than 50,000 solar home systems have been installed every month, making it the fastest growing solar home system program in the world, said the WB.

Source: New Age