How to deal with gas crisis

The Financial Express, 18 August 2012

Official moratorium on gas connections for domestic consumers has been in effect since July 2009. Industrial and commercial connections have remained suspended for nearly three years.

It was said that gas connection would be facilitated to the willing customers once gas production would reach 2,200 millions of cubic feet per day (mmcfd). During the 2010-11 gas output was nearly 1,990 mmcfd. As on August 14, 2012 gas production reached 2,228 mmcfd. The public sector gas companies produced 992 mmcfd and the international oil companies within PSC (production sharing contract) arrangements produced 1,256 mmcfd.

Petrobangla expressed its willingness to resume gas connections to the eagerly waiting consumers but the prime minister’s energy adviser ruled out the possibility to provide gas connections to domestic consumers at this stage. He suggests that the government will supply gas primarily to power plants, fertiliser factories and industrial units.

The current sector-wise share of natural gas consumption shows that 58 per cent gas is consumed by the power generation units (42 per cent by the power plants and 16 per cent by the captive generators), seven per cent by the fertiliser factories, 17 per cent by the industry sector, 12 per cent by the domestic consumers, five per cent for CNG and one per cent by commercial users.

Out of 25 discovered gas fields in the country, 19 are producing natural gas from 84 wells. The daily demand and supply gap is 500 million cubic feet (mmcfd) of gas. The energy and mineral resources division considers that the country’s demand for natural gas will almost double to around 1.45 trillion cubic feet (Tcf) in the next four years to meet the growing demands for power, fertiliser, industries, CNG and household consumers. As of now, total (proven and probable) gas reserve is estimated 16.32 Tcf.

Despite manifold initiatives to increase gas production the government could not reduce the demand and supply gap of natural gas. Rather administrative restrictions are imposed on gas connections. The policymakers are not sure when the new gas connections will be provided. Petrobangla Chairman expressed his concern that the prolonged sanctions on gas connections will encourage corruption within the gas utility companies. Media reports allege that a section of gas company staff in connivance with contractors give unauthorised gas connections. It is alleged that consumers, with the help of corrupt officials of the gas utility companies, prepare papers showing permission for gas connections prior to the period when restriction on gas connection was imposed. The new consumers have been paying to gas utility companies their gas bills but the senior management of the utility companies fail to confirm how the connections were given and to how many consumers. It is obvious that new consumers are getting gas supply as gas production has increased to nearly 500 mmcfd during the last three years but the demand and supply gap remains almost unchanged during this period.

The restriction on new gas connections has made the consumers a hostage of the gas utility companies. At the end of the day such a policy encouraged corruption and irregularities, but the magnitude of the irregularities could not be confirmed by the top management so far.

A report suggests that 12 per cent or 268 mmcfd of natural gas is being used by the domestic consumers. During 2009 the volume consumed by the domestic consumers was 210 mmcfd when the total gas production was 1,750 mmcfd. Titas Gas, the largest gas utility company, has 1.6 million customers (of which 95 per cent are the domestic consumers) and they daily consume approximately 260 mmcfd gas. The increase of 60 mmcfd gas is so far unexplained as it was attained mostly during the period of the moratorium of gas connections. It is obvious illegal gas connection is widespread.

Experts have different views on continuation of moratorium for new gas connections, specially for the domestic consumers, as it shows clear contradictions of policy or dual policy for the same city dwellers. The policymakers have been saying that the government will make LP gas supply easy and the price for LP gas will be controlled for bringing it into close parity to piped gas consumers. But hardly any infrastructure development has taken place so far to improve LP gas supply and bring down LP price. Some experts favour increasing the tariff of piped gas and use the additional revenue to subsidise LP price. They also favour the withdrawal of restriction on gas connections to domestic consumers where gas network is available.

There is a popular argument that the domestic consumers waste gas. It is partially true but due to the limited consumed volume the waste has insignificant impact on the gas supply situation. Rather survey reports confirm that the industry sectors (power, fertiliser and industries) waste significant amount of gas as they use inefficient machines and equipment and are run by poor management. Titas Gas Transmission and Distribution Company in its recent survey reveals that the gas wasted within its command area, if checked, can meet the demand of the customers waiting for new gas connections. The reports suggest that the public sector enterprises are to be blamed most for gas wastage. One report estimates that approximately 170 mmcfd gas could be saved if the plant efficiency could be improved for power generation and fertiliser production and efficiency of boiler could be enhanced. Energy and fuel efficiency remains a neglected issue for the public sector enterprises. It is reported that only if the industrial boilers are made efficient in the Titas Gas area, 15 mmcfd gas could be conserved daily. Similarly improved gas burners can save an additional 10 mmcfd gas in Titas Gas area. The most efficient public sector fertiliser company, Jamuna Fertiliser Factory, consumes 32,000 cft gas for producing one tonne of urea fertiliser. Ghorasal and Ashuganj fertiliser factories consume at a rate of approximately 40,000 cft gas for producing one tonne of urea fertiliser. On the other hand, multinational KAFCO consumes 23,000 cft gas for producing one tonne of urea fertiliser. Bangladesh Power Development Board generates approximately 2,300 MW of power using natural gas. Majority of these plants have fuel efficiency approximately at 30 per cent level.

With appropriate modernisation and technology improvement, including conversion of single-cycle plants to combined cycle ones, the gas-fired power plants fuel efficiency can be improved to 55 per cent. Surely, investment is required for improving efficiency which is scarce for public sector enterprises. But it is possibly lack of accountability and initiatives that stands on the way of attaining fuel efficiency which we so desperately need to enforce.

Household gas connection

The Financial Express, 17 August 2012

It is anything if not ironical that the main highlight of the observance of the National Energy Security Day in the country was marked by a stern ‘no’ to new gas connections to households in the near future? The energy adviser to the prime minister chose the very day to blatantly repeat his announcement made a number of times earlier, which observers thought he had better not – on that day. The adviser made the statement loud and clear at a seminar at the headquarters of Petrobangla in the capital organised in observance of the day. He said the government’s immediate priority is to increase gas supply to power plants to be followed by industries and fertiliser factories. Clearly, fresh household gas connection does not feature in the government’s priority agenda. However, provided with new energy options, he said, the government may consider providing gas connection to household consumers, but not in the near future.

It may be recalled that new connection to household consumers has remained suspended since July 2010 due to supply shortage. The government earlier said it would resume giving new connections when gas production exceeds the benchmark of 2,200 million cubic feet (mmcfd) a day. There is an apparent mismatch in the calculation of estimated demand and production target. On June 30 this year, gas production rose to 2,239 mmcfd, but in the meantime demand has reportedly reached more than 2,500 mmcfd. This explains why the government has shifted from its previous commitment, and as a result, chances of household gas gaining in priority do not appear to hold even a dim prospect in the near future.

Understandably, as a result of the prevailing situation, those being worst hit are the country’s real estate developers. The country’s real estate industry, dependent largely on bank finance, is going to face the toughest of times since the sector emerged despite many odds. The Real Estate and Housing Association of Bangladesh (REHAB) sources said that transactions in the sector have suddenly slumped by 42 per cent. Sales of a large number of apartments – ready, except gas connections – are on hold, the total number of which is reportedly close to one hundred thousand. Alarming still is the amount of investment at risk — almost entirely bank financed — that reportedly runs into several billions. If the situation – with no gas and electricity connections — persists stalling the real estate transactions for sometime more, the sector is sure to face grave uncertainties.

To be more precise, a collapse in the sector due to failure to repay loans is likely to wrench a heavy toll by way of a chain reaction in various other sectors of the economy. The fact that this sector is so integrally linked with a host of others must not be forgotten. Growth in this sector over the years has its clear reflection in the related sectors — in terms of trading as well as manufacturing. A threat to the sector is the most undesirable of the things at this stage and time.

Opaque management of mutual funds

The Financial Express, 15 August 2012

Incredible it may sound though a mutual fund (MF), managed by the ICB asset management company limited (AMCL), according to the statement of financial accounts for the year 2011-12, spent every penny of its profit for ‘provisioning’ the erosion in the value of the marketable investment. Hence, unit holders of the MF concerned have got nothing as dividend.

The MF in question, the ICB AMCL Third NRB Mutual Fund, earned a net profit of 32.37 million in FY 2011-12 and it spent the entire amount for provisioning.

None of the funds managed by the ICB itself, the ICB AMCL or other asset management companies (AMCs) made this kind of adjustment in entirety despite erosion in the value of the stocks held by them. Fund managers managed some dividend, though highly unattractive in some cases, for their unit holders.

There is no denying that when market crashes, the mutual funds which have a mix of investment in stocks and money market instruments cannot escape loss. Yet MFs are considered as safe investment because the fund mangers are not supposed to put all their eggs in one basket. So, if the eggs of one basket get broken, some others kept in different baskets go unaffected and deliver goods to the unit holders.

Since the mangers of funds that had hit the market almost at the same time with the ICB AMCL Third NRB, planned their investments better and they could declare at least 5.0 per cent dividend for their unit holders.

The late comers in the MF fraternity and also a few old ones have got a severe mauling following the market crash. Their market prices are now well below the face value and net asset value (at cost price). The MFs operated by the ICB, the initial ones by the ICB AMCL and a few by the Aims could weather the difficult time well because of their strong portfolios.

The Securities Exchange Commission (SEC) last Monday, reportedly, convened a meeting to know the opinion of the AMCs on the level of investment of MF money in stocks. At the meeting, Aims managing director Yawer Saeed advised the securities regulator to forfeit the trustee and management fees if an MF fails to declare dividends for its unit holders. His suggestion deserves due scrutiny for the fund mangers enjoys the flexibility of moving investment from one place to another, of course, within the full knowledge of the trustees concerned.

But under the prevailing circumstances, withdrawal of funds from stocks for investing in other instruments might entail substantial loss and also can further destabilise the market. That is why fund mangers do need to exercise their sixth sense in the matters of investment right at the moment.

However, the mandatory investment of 75 per cent of fund in stocks takes away the freedom on the part of AMCs to move away investment from stocks to other instruments.

The issue came up for discussion at the meeting convened by the SEC. But there was no unanimity. Some AMCs wanted the mandatory 75 per cent investment to stay for the greater interest of the capital market while others favoured flexibility in the matters of investment to make the funds ‘dividend- friendly’.

There is no denying when the market remains in high gear, like everybody mutual funds do earn attractive profit from the sale of marketable securities. But during the time like the one prevailing now, investment of funds in bank fixed deposits is far more rewarding.

In fact this is a catch-22 situation. If the MFs, particularly the late comers, start offloading stocks to put in funds in money market instruments, it would aggravate the situation of a market already in turmoil. Then again, if the AMCs of some MFs cannot move away funds from stocks, the unit holders would continue to get rather frustrating amount of dividend or no dividend for an unspecified number of years. Nobody knows for sure when the market indices would touch respectable levels.

Another issue — the management expenses of MFs — needs to be examined closely. Since there is no provision for holding annual general meetings in the case of MFs, neither the trustees nor the AMCs get any opportunity to interact with investors on issues such as management of funds and expenses made thereof.

Regulations concerned have made the investments in MFs rather safe and the risk of fraud is virtually non-existent. However, investors are exposed to market uncertainty.

Trustees of a mutual fund do play the most important role in safeguarding the interests of the unit holders. AMCs are just managing the investors’ money. Trustees contract out fund management job to the AMCs against a specific amount of fees.

Trustees are accountable to investors for the funds and the AMCs, to the trustees. Since there is little scope for the unit holders of MFs to interact with their respective trustees, the securities regulator needs to see whether the trustees are carrying out their fiduciary responsibilities properly.

The regulator has to keep in mind that even holding of AGMs and publication of un-audited and audited financial statements could hardly bring many errant listed companies on right track. In the case of MFs, unit holders have little knowledge about how their money is being invested and spent. So, the regulator should keep watch on how best the trustees doing their job to protect the interests of the investors.

Need of Coordination on Infrastructure Development

Bangladesh Economy Desk, 14 August 2012

It doesn’t need to be mentioned that, weak infrastructure specially poor road communication is one of the major obstacle for our economic growth as well as movement of our people. The issue came on prime seen almost one year ago. After huge protest new minister Obaidul Quader and Suronjeet Sengupta came to position of Mr. Abul Hossain. And finally Obaidul Quader became in charge of Both Roads and Railway division. Form the very first time people noticed Obaidul Quader’s active field visit and strong actions about roads and railway. In many cases Obaidul Quader’s visit played serious positive impact but even after his serious afford some weakness still remains. It needs to be mentioned that the very top design of our economy and planning is centralized so that government had given priority to develop capital city rather than other cities. As a result massive load came to the small area. Our Road network is not designed as decentralized way; so that people of other districts need to come to Dhaka first than go to other districts. Roads and highways department (RHD) are trying to make some bypass roads in recent time but still it is not enough to distribute highway loads. Another problem Dhaka has is its few number of gateway/ entry and exit points. If someone want to go northern parts of the country he need to go through Uttara or Mirpur but those who want to go towards Comilla, or Chittaging they need to cross Jatrabari Area. Now one of the thing which many people did not mentioned that Jatrabari area became a name of ‘horror’ due to the construction of Fly over on that area. The City Corporation is the authority to develop that flyover which is also under the ministry of LGED. In this 2012’s Ramadan Obaidul Quader visited Jatrabari area many times to make some improvement on that area but to improve the situation he need to get support from LGED ministry. Unfortunately he did not receive that cooperation in due time. As a Result he faced embarrassing situation. People still remember that Mr. Quader had to complain it to Prime Minister due to the situation. Than situation changed.
We as general people of this country always need fast and coordinated activities from the Government. But unfortunately we see absence of that in most of the time. This is nothing but weakness of the governance. As general citizen we hope for change of this situation specially in road transportation sector. So that the, economy and movement of our people both can come to smooth track.

Of food production and food insecurity

The Financial Express, 12 August 2012

Two reports released separately by the Food and Agriculture Organisation (FAO) of the United Nations and the International Food Policy Research Institute (IFPRI) on the latest food production and price situation late last week should make the policymakers, who recently sounded very upbeat about exporting rice, wake up to the realities. One report came in the wake of extreme weather conditions in a number of countries and the other one dealt with the state of global food security situation.

The Global Food Security Index-2012, prepared by the Economist Intelligence Unit (EIU), has found Bangladesh to be the least food secure country in South Asia. Food insecurity involves two issues – vailability of enough of food in a particular country and the capacity of its population to buy the same to meet their minimum daily calorie requirement. EIU has categorised Bangladesh as food insecure mainly in terms of the second reason. And food price index has strong bearing on the food security situation. That index has of late come under a fresh threat.

The food price index, as measured by the FAO, recorded a 6.0 per cent rise in July from June after a continuous decline for three previous months. Extensive drought in the United States pushed up the prices of maize and soya bean in past two months by 30 per cent and 19 per cent respectively. Similarly, the wheat prices surged 19 per cent on the back poor production prospects of the crop due to continuous dry weather. Sugar has not been spared also. Untimely rain in Brazil and poor rains in Australia have contributed to the rise in its prices.

Some areas in India, one of the world’s largest food producers and consumers, have been hit by drought. Bangladesh too has been experiencing less-than-normal rainfall this year. Barring Chittagong and Rangpur, all administrative divisions had between 6.0 per cent and 33 per cent less rainfall in the month of July last. Even the rainfall in the first 10 days of the current month was less than normal. The food minister has expressed his concern about the impact of the drop in rainfall on the prospect of Aman rice the transplantation of which has already started.

Over a period of last one month, according to the food minister, the price of wheat imported by Bangladesh has gone up by $45 a tonne. The international rice prices until now are more or less stable. But with the rise in prices of other cereals and food items, there could also be sympathetic rise in international rice prices. However, what should worry the government most is the impact of any international price increase on edible oils, sugar, pulses and wheat on the domestic price levels of these items.

The ongoing developments in food production have raised the spectre of the 2007-2008 when international prices of most food items reached their record highs, causing immense sufferings to the poor across the globe and triggering food riots in a number of countries. Food prices in Bangladesh more than doubled in a matter of months because of the greater dependency on the import, mainly created by a devastating cyclone, Sidr. The government seems to be suffering from a sense of complacency following good rice production for the last couple of years. But the farmers are now deeply frustrated because they did not get fair price for their produce in the recent years.

So, until the transplantation time is over, it is difficult to know how much area the farmers would put under the Aman crop. The poor rainfall, which raises the cost of production due to cost-intensive supplementary mechanised irrigation, may discourage the farmers to cultivate Aman crop as extensively as they did during the past two years of good rain. So, the government while watching intensely the international food prices should start work on devising a contingency plan so that it is not caught off guard in the event of an abnormal rise in international food prices.

Food-security score of Bangladesh

Daily Sun, 12 August 2012

Many in Bangladesh, basking in the present stable food supply situation, seem to have drawn a wrong conclusion about the country’s food security. It is true that the country, luckily not battered by damaging calamities during the last three years, had good harvests of rice almost fulfilling the annual need for food grains. This helped slashing food grain import target to 1.2 million tonnes in the 2011-12 fiscal from the original target of 1.7 million and reducing the country’s actual import of rice and wheat by more than 50 per cent. The idea of exporting rice, as we were told by the finance minister recently, might have been prompted by the present food supply situation. However, as part of a down-to-earth decision, the government has imposed a ban on rice export till the end of the current fiscal.

In sharp contrast to any such misconception, Global Food Security Index 2012 released on Thursday by The Economist Intelligence Unit portrayed a sorry picture about the country’s food security situation. According to media reports, the Index based on an assessment of food affordability, availability and quality of 105 countries placed Bangladesh at the 81st position with a score of 34.6 on a scale of 100. Bangladesh has been adjudged as the least food-secure nation among the South Asian countries.

Good harvests in three consecutive years do not mean that food problem has basically been solved. It was not in too distant a past that the country had fallen into a near crisis situation when a country from which Bangladesh used to import a bulk quantity of rice halted export and abruptly increased the export price. No doubt Bangladesh is almost close to near sufficiency in food production but still far from reaching a surplus status. Bangladesh’s storage capacity is too limited to stockpile enough food grains for longer period. Moreover, crop production may be seriously hampered by calamities any time. A drought-like condition prevailing in some northern districts is very likely to affect the next aman cultivation adversely. A price surge in the global market apprehended by UN’s food agency may make it difficult for the country to import food grains.

Food security is not just a matter of availability of sufficient food in the market; people must also have access to food. In the inflationary market situation, people of low and fixed income groups are spending a major part of their income to buy food. Quality of food is another important element of food security. People are simply eating poison as the authorities have failed to ensure availability of safe food.

To upgrade the country’s position in the food security ladder, the authorities should take pragmatic measures and elevate it from its present near-sufficient status to a food surplus position, with sufficient stock of food to tackle crop failure, even for a long period. For this, the weak points and limitations in the country’s food security system, as indicated by Global Food Security Index 2012, should be taken into cognisance and remedied.

Dismal poultry sector

The Financial Express, 11 August 2012

The country’s poultry sector, no longer confined to the scale of small and improvised cottage enterprises, but a fast growing industry with an estimated investment of Tk 150 billion, is fraught with problems that need immediate attention. The fact that the government is far from taking adequate steps to exploit the potential of this very prospective sector has been amply testified in a statement by none other than the minister for fisheries and livestock himself when he reportedly blamed his own ministry for not being forthcoming enough to do the needful. He was categorical in citing mismanagement and unplanned moves of the ministry and respective departments as largely responsible for the sector’s awful plight. The clear signal that such a statement reflects is that the government is well aware of what it was supposed to deliver and what in reality it has so far done. One may be tempted to sense a ray of hope lurking in the minister’s owning up the realities on the ground, which calls for fresh initiatives to reenergise the sector.

An evaluation of the contribution of the poultry sector to the country’s economy will, among others, reveal the highly laudable employment it generates, that too in rural and semi-rural areas. No wonder, this sector is the second highest employment provider in the private enterprises, next only to the readymade garment industry. Endowed with its unique distinction of rural employment, mass migration of labour as has been the case with RMG or common to most other industries, has not happened to add to the population burden in urban areas. From small and apparently insignificant strides, this sector has emerged on its own right to satisfy the most valued protein requirement of the country’s 160 million people. However, given the vulnerability of the sector due to high mortality of the broilers and layers from recurrence of killing diseases such as avian flue and the likes, sustaining the growth of the sector has been a threatening challenge ever since it emerged into prominence.

It is, indeed, extremely disheartening to note that over the recent years there has been a noticeable shrinkage in the sector accounting for closure of around one third of the roughly calculated one hundred and twenty thousand farms across the country. While causing a drastic decline in poultry production, this has, for obvious reasons, triggered a hike in prices of eggs and meat all over the country. The Bangladesh Poultry Khamar Rokkha Jatiya Parishad, one of the leading poultry associations, has alleged that lack of action on the part of the government to stop avian flue through banning import of poultry products- eggs and a-day-old chicks- from avian-prone countries is one of the key reasons for much of the maladies afflicting the sector.

Those concerned are of the opinion that unless the government comes up with a proactive poultry policy and an effective plan of action, things are going to further deteriorate in the days to come. There is a critical need for the much desired harmony between consumer demand for eggs and broiler meat and planned production. This in the first place may necessitate substantial input of resources by way of doubling the parent stock, hatcheries, broiler and layer farms, feed meal plants, among others. The government’s farm credit policy, which excludes poultry sector from its eligible credit-worthy sub-sectors, should be also forthcoming to find ways and means to extend a helping hand to this susceptible but highly prospective sector.

Rising prices of medicines

Daily sun, 11 August 2012

That prices of medicines, including the life-saving drugs, have been going up steadily is clear from some recent media reports. When in the budget duty on components for manufacturing medicines was reduced, some observers had predicted that this concession would not benefit the sick but would only widen the profit margin of medicine companies. Indeed, there is hardly any recent instance known to us of medicine prices falling. On the contrary, prices have risen further!

A report front-paged in yesterday’s daily sun mentions that most pharmaceutical companies are increasing the prices of medicines at their sweet will in the absence of effective government monitoring. Based on first hand findings, the report further says that 10 Antacid tablets of different pharmaceutical companies now sell for Taka 20 which was priced at Taka 15 only a few days back and the price of Antacid Syrup has risen exorbitantly. The price has quadrupled over the last two years. The price of calcium capsules has shot up from Taka 420 to Taka 600. Patients of diabetes and hypertension are required to take medicine throughout life. Therefore any increase in the prices of medicines of these ailments will dog the patient for the rest of their lives. Diabetes Day is observed every year amid much fanfare but the authorities have done little to soften the financial hardship of medicine users by keeping in check the price of Insulin and related medicines.

Keeping prices of medicines stable should be a priority before the government. The poor and the sick must be protected from rapacious pricing and profiteering. One reason why medicine prices are rising may be that the medicine companies, due to unhealthy competition and the urge to jostle, provide expensive gifts to doctors. These gifts are no longer limited to desk items and stationeries but nowadays they reportedly include household gadgets, even air tickets. This is unethical both on the part of the giver and the taker. The poor patients have to pay for this kind of motivated largesse. Then the companies have to maintain an army of medical representatives with their fat pay packs and perks. That too inflates the production cost of medicines, hence the prices. And all this falls on the patient. We cannot say offhand how far the role of medical representatives in health service is positive. A law should be made prohibiting the medicine companies from giving any gifts to doctors except medical literature.

Failure to implement projects reflects on govt incompetence, insincerity

New Age, 8 August 2012

That the government of Awami League Jatiya-Party coalition is incompetent, if not insincere, to devise and implement development programmes has surfaced again with the latest report of the implementation, monitoring and evaluation division of the government released on Monday. According to the government report, as reproduced with comments by New Age on Tuesday, 215 development projects out of a total of 244 remained incomplete in the 2011–2012 financial year. Clearly, only 12 per cent of the total projects under the annual development programme that were scheduled to be finished in the stipulated period of 2011-2012 financial year were completed. This news is quite disturbing for any ‘developing’ country that badly needs a higher rate of economic growth and an equitable distribution of wealth to change the lot of the people. One wonders how leaders and activists of a governing party can continuously be so loud about their successes as those of the ruling Awami League are now doing almost every day when it practically fails to implement 88 per cent of the development projects in a year.
The government officials concerned have found out, as the report shows, the reasons behind the failures. Inadequate and delayed release of financial resources, delayed disbursement of foreign aid, complexities of land accusation, inability to use resources, lack of supervision and control by the implementing agencies concerned, lack of coordination and cooperation among the government departments concerned, revision of project contents, repeated transfers of project directors, corruption and negligence of the agencies and inefficiency of the officials concerned are the reasons behind the failures of the timely implementation of the development projects. If we accept the identifications of the reasons for failures to be correct, one would not take more than a moment to realise that there remains the prime reason, which is vital but not mentioned in the report, behind the massive failures in carrying out the development programmes and that is the complete failure of the political authorities presiding over all the departments in question. It is the responsibility of the political authorities to make sure that financial resources are mobilised in time, unable and inefficient public servants are removed, well-coordinated monitoring efforts are put in place and frequent transfers of project directors are not done, et cetera to get development works finished by the stipulated time. But no ministers have so far been removed by the highest authority on charge of incompetence or insincerity or both, or no public servant has been punished on the grounds of inefficiency in more than three years and a half of the regime although many officials have been ‘punished’ in many ways on partisan, political considerations.
However, the bleak picture of the failures of the development programmes only reflects on the incompetence and insincerity of the political authorities of the state, for which the infrastructural development is slowed down, growth of national economy is hampered, and subsequently the entire populace, particularly the poor, are to suffer for years to come. Before the people punish the government in the next general elections for multidimensional failures, the highest political authority of the government should take a chance to survive people’s electoral wrath by way of replacing the errant ministers and officials with the comparatively better ones. The sooner the better, both for the government and the people.

Relocation of tanneries

The Financial Express, 8 August 2012

Shifting of the country’s major tannery hub from Hazaribagh to Savar seems to be taking too long a time to be justified by any count. Since the High Court verdict in 2001, the issue of shifting has been making rounds for a while as a priority job, but with little clarity. Lately, however, it is apparent that the government has sat up to accomplish the long-awaited job.

Understandably, the need for shifting has been prompted by a variety of extremely valid reasons. While it is crucial for a well-planned and healthy growth of the country’s leather sector in terms of the high prospects it has in the booming overseas markets, no less important is the need to counter the mounting threat of rendering the Buriganga- the lifeline of the capital- dead. The tanneries at Hazaribagh and its neighbourhood totaling more than 200 units reportedly discharge on a daily basis an approximate 7.7 million litres of liquid waste and 88 million tonnes of solid waste. With a very high concentration of toxic chemicals such as chromium, cadmium, arsenic and lead, this reckless discharge is responsible for seriously contaminating the ground and surface water as well.

Taking stock of the developments after a decade of the court verdict shows that although the shifting process now looks near-ready, there are critical issues that are causing the delay and may continue to do so for an indefinite period of time unless the government takes a firm stand to have it done within its current tenure. It could be learnt that most of the necessary infrastructures – construction of connecting roads, water treatment plants, gas and sewerage line, power substation plant- except central effluent treatment plant (CETP) – have been set up at the 200-acre leather estate at Hemayetpur, Savar, built at a cost of Tk 5.46 billion. The Bangladesh Small and Cottage Industries Corporation (BSCIC) has reportedly allotted 205 industrial plots to 155 tanneries. But there appears an unresolved issue- a formidably daunting one as claimed by the tannery owners- which is likely to stall the shifting process. The tannery owners are demanding a compensation package of Tk 11.00 billion, besides a readymade CETP and soft loans. The compensation money, the owners claim, will be required for setting up of new infrastructure, and repair and replacement of the machinery and equipment that would be damaged in course of the shifting. As regards the CETP, the owners say that they had signed a memorandum of understanding (MoU) with the government back in 2003 wherein the government agreed to set up a CETP at its own financing.

There are views that strongly contest the way the tannery owners wish things to happen, obviously to their own advantage. True, relocation would involve costs on the part of the owners, but the fact one must not lose sight of is that the government, despite its inefficiency in so many sectors of the economy, has of late been very forthcoming to take a serious note of the future of the tannery sector, that too involving high costs. Instances may be rare in the developing world where governments have built leather parks/estates with necessary infrastructure to accommodate a large number of tanneries (150+) free of cost. It is only in connection with the CETP that the government wants the tannery owners to share, which the owners are not ready to accept.

Sharing the CETP costs has thus become an issue for both the parties – the government and the tannery owners – as they are not able to come to terms with. But the fact remains that the issue, however troublesome it may be, has to be settled and the sooner it is done the better. There is no reason to suspect any gap in either party’s wisdom on the urgency of a CETP. In fact, this prospective sector with its immense potential to grow manifold may be fraught with serious uncertainties in the near future for the simple reason that without a CETP in operation, Bangladesh will not be allowed to export leather and leather goods to the developed markets of the EU and the US. And this has to happen within 2014.

Industries Minister Dilip Barua expressed the hope that installation of a central effluent treatment plant (CETP) for the leather estate at Savar will be completed by June 2013. The project director of the leather park is reported to have said that the infrastructure work of the estate has been completed and the CETP installation work is also nearing completion and will be done before the deadline. He is also quoted as saying that his team is working to set up a solid waste treatment plant connecting the CETP to treat solid leather wastes as well, which will be able to generate three megawatts of electricity. The treatment plant, when fully functional, would be able to turn 20 million litres of waste water into drinking water a day. With four units, it is expected to treat 5.0 million cubic metres of liquid waste a day.

With the tannery estate ready to be handed over, the issues confronting the shifting process should not be left to linger on. We understand, a dialogue between the government and the tannery representatives is on for sometime to sort things out to the mutual satisfaction of both. But can either of the parties afford to wait any longer?