The government owes a whopping sum of Tk 30,832 crore as debt service liabilities to lenders, including foreign donors, for the power sector since 1972, though such massive funding failed to yield the desired improvement in the sector.

The DSL on account of the power sector is 57 per cent of the government’s accumulated debt worth Tk 54,468 crore to foreign and local lenders, according to official data as of June 30, 2009. Of the power sector accumulated arrears, the government has to pay back Tk 28,086.16 crore or 91 per cent to the foreign creditors and the rest amount to the local lenders. Despite shouldering such huge burden of debt, the country is yet to see any tangible improvement in the power sector—thanks to rampant ‘mismanagement and corruption’, say economists and development practioners involved in the energy sector finances. Daily power shortage these days reached more than 2,000 megawatt which is causing a sloth in the economic activities, they observed.

Bangladesh Power Development Board owes DSL worth Tk 29,519 crore, Rural Electrification Board Tk 1,318 crore and formerly Dhaka Electric Supply Authority Tk 995 crore as of June 2009, according to statistics available with the finance ministry. For BPDB alone, the government took 64 project loans from the lenders until June 2009, said a publication of the finance ministry. The government usually provides loans to autonomous, semi-autonomous and sector corporations either from its own resources or from foreign loans which are repayable. Payment against DSL by the power sector has been dismally poor because of utter mismanagement and lack of professionalism in handling the repayment of the principle and the interest amounts to the borrowers, said former advisor Akbar Ali Khan.

The government has kept aside 14 per cent of its total budget of Tk 113,819 crore in the current fiscal for the interest payment. Keeping a major portion of the budgetary allocation for interest payment against the DSL is contrary to prudent fiscal management, Khan pointed out. Bangladesh Institute Development Studies director general MK Mujeri said the growing annual interest payment would reach at a danger level unless the policy makers handle the foreign and local borrowings purposefully. He cautioned that investment without proper returns would jeopardise future fiscal management. Annisul Haq, president of FBCCI, the apex chamber body, termed shortage of power supply as the main impediment to new investments. He said unabated power crisis was holding back the country’s economic progress. The per capita power consumption in Bangladesh is only 172 kwh, the lowest in South Asia, compared to 325 kwh in Sri Lanka, 408 kwh in Pakistan and 665 kwh in India.