• Thursday, Aug 18, 2022
  • Last Update : 04:24 pm

FBCCI dialogue on power: High bank interest rate hindering investment

  • Published at 04:45 pm February 4th, 2019
Policymakers and private sector representatives at an institutional dialogue on power organized by FBCCI, held at the Westin Dhaka on February 3, 2019 Rajib Dhar/ Dhaka Tribune

Both the State Minister for Power, Energy and Mineral Resources Nasrul Hamid and FBCCI President Md Shafiul Islam Mohiuddin expressed concerns regarding the banking sector

FBCCI President Md Shafiul Islam Mohiuddin on Sunday said that shortage of electricity supply to factories is hampering their production, while machineries are breaking down as a result of voltage fluctuations.

Mohiuddin also blamed the Bangladesh Energy Regulatory Commission (BERC) for handling energy pricing as per their own wishes.

He made the remarks while speaking at a discussion titled “Unthinkable success in power generation: Maximum use of electricity for achieving expedited growth”, organized by the Federation for Bangladesh Chambers of Commerce and Industry (FBCCI) at Westin Dhaka.

Stating that investment in the country is not as high as expected, the FBCCI leader attributed it to a high interest rate of 14%.

“As Bangladesh is advancing towards large industries from medium-sized ones, pricing in the power and energy sector needs to be viable,” Mohiuddin observed.

Speaking at the event, State Minister for Power, Energy and Mineral Resources Nasrul Hamid also echoed that the private sector cannot attract investments into the country because of the high interest rate on bank loans.

“No venture will be successful with a 14% interest rate, as then investors can only make a maximum profit of 5%,” Nasrul said while addressing the discussion.

However, claiming that uninterrupted power supply at a reasonable price is a major challenge for the new government, Nasrul explained that providing uninterrupted electricity and gas will not be possible without "planned industrialization".

Speaking as the special guest, the state minister assured that electricity and gas supplies will be smooth in the special economic zones (SEZs) being set up in the country.

Nasrul also urged industrialists to stop using captive power and instead, get connected to the national power grid.

“If you stop using captive power, investment in our power sector will rise, and thus, help us to ensure smooth supply of electricity,” he said, adding that the government is mulling whether to offer any incentives for running factories at night.

He also called on the private sector to step forward in boosting investment, adding that the government will need around Tk7,000 crore and Tk4,000 crore by 2041 respectively for the power and energy sectors.

The state minister added that the government is prioritizing cross-border electricity purchase as it found importing power from India to be more profitable and time-saving.

Dubbing bad loans as a problem for the country’s banking sector, Salman F Rahman, private industry and investment adviser to the prime minister, said they have already discussed the issue with the new finance minister.

“Both non-performing loans and interest rates will plummet soon as Bangladesh Bank is coming up with reforms for the banking sector,” said Salman, who was the chief guest at the event.

Discussing Bangladesh's rank in the World Bank's Ease of Doing Business index, he said they are not bothered with the findings of the World Bank since the new government is highly focused on addressing the obstacles of doing business in the country.

According to World Bank's 'Doing Business 2019: Training for Reform' released on October 31, 2018, Bangladesh ranked 176th out of 190 countries in terms of ease of doing business.

Salman suggested that a "problem-solving wing" should be opened at each ministry to help service-seekers get rid of bureaucratic hassles.

Among others, Power Division Secretary Ahmad Kaikaus, Bangladesh Power Development Board Chairman Khaled Mahmood, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Director Mostafa Monwar Bhuiyan, FBCCI Director Md Yousuf Ashraf, and Energypac Power Generation Ltd CEO Humayun Rashid, were present at the event.