This crisis could have been avoided if the government handled the power sector professionally and allowed genuine bidders like Summit power in the 450 MW Sirajganj project to build projects. But in the last four years, the power sector only saw dominance of politically biased decisions.

Mahmood's performance has been so poor that he has taken practically no decisions on power projects in recent months. He himself stated on several occasions that he does not take any decision on power sector issues. Instead the Prime Minister's Office takes his decision. This has only worsened the existing chaotic scenario in the power sector, which is engulfed by allegations of wholesale irregularities and corruption.

In the last four years, the government has actually succeeded in adding only an 80 megawatt flawed power plant --the Tongi peaking power plant. Power demands, on the other hand, shot up by more than 1,500 MW meanwhile. Such enormous demands were being met by larger power projects by the previous Awami League government, some of which ended after the BNP came to power.

The BNP government signed or okayed a few more power projects --but not a single one of them had been signed through a fair or transparent process. And these are exorbitantly over-priced.

The single reason why the BNP failed to add power plants in tandem with the rising demands is corruption.

Even now, with huge load shedding crippling economic activities, the government is trying to award power sale contracts to small power (10 MW to 50 MW) generators. All of these so-called small power bidders, which have not yet officially surfaced, are ruling party ministers, MPs and leaders.

The power sector has been termed by the World Bank as one the country's most corrupt sectors, where different business lobbies with aid from a section of officials and decision makers are striking raw deals at the cost of the nation.

The interference of the PMO also affected leadership in the power ministry, Power Development Board (PDB), and the Power Cell. Both the power ministry and the PDB saw frequent changes at the topdisrupting continuity. At the Power Cell, the PMO removed two very competent officials to clear a path for some unsolicited power deals.

In some of these changes, the state minister protested but could not stop the PMO.

POWER PROJECTS
Under the present regime, the government signed three other power projectsall of them seriously flawed. These are: the 90 MW Fenchuganj project, the 250 MW coal fired Barapukuria project and the 70 MW third-phase Mymensingh project. Of these, the Mymensingh plant may come online within a few months.

Both the Mymensingh 70 MW and Barapukuria 250 MW projects were signed through unsolicited bids.

The Mymensingh project is being implemented at a sky-high cost of $120 million and the Barapukuria at $220 million. The Mymensingh project is nearly $90 million costlier than a similar sized PDB project, while the Barapukuria is costlier by $70 million.

Of these two, industry insiders say the Barapukuria plant is likely to suffer seriously as the coal supply from the Chinese built coal mine itself may not be optimal. The mining authorities have been making many claims about its success, but insiders say the coal production capacity has already halved due to faulty mining design.

The Fenchuganj combined cycle power project saw six rounds of bids beginning from the Awami League regime. Each of the bids were cancelled and re-tendered because of pressure from business lobbies representing the bidder that failed to win. Finally, it was Chinese company Harbin that got the deal. But Harbin was earlier disqualified in the third re-tender of the Fenchuganj project because it lacks the technical qualifications required to set up a combined cycle bid. The PDB bid criteria demanded Harbin to design, install and commission a combined cycle plant --which it did not.

Harbin was previously awarded the Tongi 80 MW simple cycle plant. The design flaws of this plant led to frequent shut downs since it began test operations from early this year.

The government eight months ago also okayed the Orion-Belhasa proposal, led by German company Steag, for the Meghnaghat 2 power project. However, the original bid was submitted by Orion-Belhasa led by Japanese company Nisso. Although the law bars awarding one's contract to another, the government did so to favour Bangladeshi Orion, which is close to the alternative powerhouse of the BNP. Strangely, the Orion-Belhasa-Steag contract has not been signed yet. The Daily Star previously reported that Steag has withdrawn from the bid-- creating a legal crisis while the PDB claimed that Steag is still in the bid.

The government is also holding a secret unsolicited negotiation with US-Irish joint venture Cadogan-Manning Group for the Meghnaghat 3 project. Severe irregularities and whimsical negotiations for this project, if signed, will only add to the woes of the power sector.

The state minister more or less played a silent or passive role in these bids --all of which are practically pushed by the PMO. He has shown some leadership in the flawed Harbin's 80 MW Tongi plant, but his ministry has by and large been dictated by the PMO from the beginning.

TRANSMISSION
The country's power transmission system remains very poor at different places because the government never undertook a timely project to upgrade the transmission system.

For instance the majority part of Dhaka's load-shedding problem is the result of a shabby transmission system at places. The Greater Dhaka distribution project phase 4 was supposed to be initiated in 1996 and completed by 2001. This project is still under implementation.

An example of an extremely slow decision is the Greater Chittagong Phase 3 distribution project. The original project was supposed to be initiated back in 1994 and to be completed by 2000.

But it was not before 1999 that the government identified the need to upgrade 28 sub-stations in Chittagong under this project. The first tender for it was held in 2001 and as usual it went for a retendering. Pressures from business lobbies ultimately drifted the awarding process to 2005. The government awarded the contract a few months back and the project started five years after it was supposed to be completed. Consequently the power supply scenario in Chittagong remains very shabby.

A similar condition prevails in Rajshahi, where the government did not allocate any fund for a distribution system for several years.

The 16-town project in the southwestern region suffered a huge delay because of pressure from MPs belonging to these towns. The MPs raced with each other to focus the project's funds in their respective areas --making the PDB spend Tk 475 crore as loans instead of Tk 225 crore. This cost overrun has now stalled the project. This project was initiated back in 1998, but its implementation began under the BNP government.

Again in transmission, the state minister had not been very pro-active as there has been a lack of seriousness in the government in understanding the importance of the transmission system, power sector sources say.

CORRUPTION ENGULFED REB AND RPCL
The government last year lost a 60 million Euro German grant for the Rural Power Company Limited (RPCL) when the RPCL, through various means, refused an audit by the German government. The German government initiated the audit following a report in The Daily Star about wholesale corruption in the RPCL involving the German grant.

With silent support from the REB, which leads the RPCL board, the RPCL refused the audit as it would have exposed a serious business monopoly by one Captain Reza, who headed the Lahmayer consultant firm that holds the highly over-priced maintenance and advisory contract to the RPCL Mymensingh plants. The Lahmayer also took all decisions of the RPCL, changed officials and designed the three over-priced Mymensingh 70 MW plants.

Press reports against this corruption were largely ignored by the government, which undertook no investigation or action until things turned very messy.

Soon after the withdrawal of the German grant, Captain Reza tried throwing out the government stake in the RPCL to ensure his full personal control over this cash cow. This time, however, the government was compelled to react. At one point, Captain Reza sabotaged the Mymensingh plant and fled from the country. He is now wanted in two subversion cases.

The RPCL affair still remains murky and an audit will reveal who a group of officials, political bigwigs and Captain Reza robbed in its disguise of multi-million dollar projects.

Meanwhile the REB, which is often hyped as a successful venture, remains yet another cash cow for a section of officials, politicians and businessmen. The REB now spends nearly Tk 300 crore a year to purchase concrete poles, when it could do the same job for Tk 85 crore if it used wooden poles. Concrete poles are inferior to wooden poles and the use of such poles was unheard of before the mid-nineties.

Whereas a cash crisis compels the government to abandon smaller power projects, the policymakers maintain a mysterious silence over the concrete pole issue.

The handling of the REB-RPCL is again dominated by the PMO, rather than the state minister, who could have played an active role in having the German audit done to ensure the 60 million Euro grant. The power sector has been seriously suffering from a fund crisis, and protecting Captain Reza at the cost of the sector was not justified. If the action to oust Captain Reza was taken a year ago, the country would have had the grant easily. Similarly the silence of the state minister about the REB poles scam remains mysterious.

PDB'S FINANCIAL CAPACITY
In the last four years, the financial capacity of the PDB --the manager of the country's power sector --has worsened more than ever. It is mainly because of the uneven bulk power sales rates which passes all the losses on the PDB, leaving the profits (at least by the book) to the other bulk utilities.

Whereas the PDB's cost per unit of power stands at Tk 3.30, the government forces PDB to sell the same to the Reb at Tk 1.82 (plus 23 poisha for Power Grid Company Bangladesh's wheeling charge), Desa at Tk 1.89 (plus 23 poisha wheeling charge), and Desco and West Zone Tk 1.94 (plus 23 poisha). These clients consume 78 percent of PDB's power while the PDB sells the remaining 22 percent directly to its clients at a better rate.

This situation is forcing the PDB to incur a Tk 400 to Tk 500 crore loss each year. However, the government remains totally indifferent about this financial mess.

The state minister played little role in improving PDB's financial capacity.