Driving towards energy divide?

The same report also says that only 6 per cent of the households in Bangladesh are connected with gas and most of them in urban areas. Subsidy on domestic consumption is Tk. 12 billion/year and it is a 74 per cent subsidy assuming Kerosene as alternative fuel and Tk. 16 billion/year which is 79 per cent subsidy assuming LPG as alternative fuel. This goes to mean that (a) subsidy on energy is being seized upon by the rich and urban dwellers and (b) inequality across income groups, as far as energy cost is concerned, has been rising. However, total energy use by the poor in the eastern part where gas is largely available is Tk.500/moth and that is 30 per cent lower than rich households. But in the western part of the country where gas is yet to be made available, the rich spends 65 per cent more than the poor implying that the inequality is higher in the western part than in the eastern side.

The energy prices are also higher in poverty-ridden regions. For example, according to BBS, the fuel and lighting consumer price index rose 7 and 8 times from immediate post independence to 2002/2003. But in Rajshahi and Khulna, the index went up by 13 times! Whereas, 61 per cent of the poor people (on head count basis) are reported to live in Rajshai and 50 per cent in Khulna which is much higher than Dhaka or Chittagong.

According to the Household Income and Expenditure Survey 2000, households spending Tk.3000-5000 per month spend 14 per cent of their monthly budget on fuel and lighting. The richer section spends only 3-4 per cent for the same fuel and lighting. The poor tend to spend more on energy than the rich.

Only 12 per cent of the households for the bottom fifth of income distribution and 21 per cent of the second lowest quintile have access to electricity. Most of the households at top quintile have access to electricity. That means, access of the poor to electricity is very low in a regime of poor national access to electricity, which is reported to be 30 per cent.

By and large our perceptions, policies, priorities and practices seemingly remain to be purely pro-rich and utterly pro-urban. We are driving towards an "energy divide" unless we develop institutions, governance and commitment to eradicate the malaise.

Why the pitfalls? Because we think that gas should gear up growth through fertilizer industry and power plants. Undoubtedly they are the big players in the market consuming about 75 per cent of total gas. But we should also bring under the net the small and cottage industries and the poor households who could also contribute to growth and poverty reduction. Any industry located in the western zone relying on furnace oil would turn out to be uncompetitive compared to that in the eastern part with access to gas. The small and cottage industries employ over four-fifths of the industrial labour force. I reckon that many of the small and cottage industries already on the verge of extinction could stage a come back and remain sound in the presence of gas.

Gas at household levels could save the poor in a lot of ways. The number one killer of infants in Bangladesh is reported to be reparatory problem. Every year, throughout the world, 2.5 million women and children die from smokes of burning biomass on open fire. The poor could also gain from preserving the cow dung, tree leaves and other fuels, which can be used as organic manure.

We can only suggest that we should avoid the policy of "energy divide". This can only happen if we can change our mindset. That is, the poor cannot afford to pay for gas connection and monthly bill. As far as cost of connection is concerned, credit facilities would enable them to have an access. As far as monthly bill is concerned, it should not be a problem given that the poor are already paying more than the cost of gas.

Just think of the time saved in collecting fuels. On average, children and women in the collection and management of traditional fuels spend 3-4 hours. Children are robbed of their reading times due to households' fuel scarcity. Poor women could be helped to do some other jobs. In weaving, it takes 14 hours to process yarn under traditional methods and fuels. With gas, it could be reduced to 6 hours. The cost saving could be as high as 60 per cent for processing of yarn and 40 per cent for dyeing. Mind that most of our weavers are poor.

The society should aim at attaining a "general equilibrium of happiness" where every one, rich and poor would have access to public services and where each and every one should have the right to pay for the services. If there has to be any subsidy, then it should go to the poor first. Unfortunately the subsidy is being seized upon by the richer section to result in a "partial equilibrium of happiness" where some have to live and many to die. This is no good for the society.

Abdul Bayes is a Professor in Economics, Jahangirnagar University.