Hypothesis and Theory ARTICLE
Corruption significantly increases the capital cost of power plants in developing contexts
- 1School of Engineering, Cardiff University, United Kingdom
Emerging economies with rapidly growing population and energy demand, own some of the most expensive power plants in the world. We hypothesized that corruption has a relationship with the capital cost of power plants in developing countries such as Bangladesh. For this study, we analyzed the capital cost of 61 operational and planned power plants in Bangladesh. Initial comparison study revealed that the mean capital cost of a power plant in Bangladesh is twice than that of the global average. Then, the statistical analysis revealed a significant correlation between corruption and the cost of power plants, indicating that higher corruption leads to greater capital cost. The high up-front cost can be a significant burden on the economy, at present and in the future, as most are financed through international loans with extended repayment terms. There is, therefore, an urgent need for the review of the procurement and due diligence process of establishing power plants, and for the implementation of a more transparent system to mitigate adverse effects of corruption on megaprojects.
Keywords: Corruption, Power plant, Energy sector, Capital cost, developing context.
Received: 11 Sep 2017;
Accepted: 14 Feb 2018.
Edited by:Sonia Yeh, Chalmers University of Technology, Sweden
Reviewed by:Peter Burgherr, Paul Scherrer Institute, Switzerland
Constantinos Taliotis, Royal Institute of Technology, Sweden
Copyright: © 2018 Debnath and Mourshed. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Mr. Kumar Biswajit Debnath, Cardiff University, School of Engineering, 52 The Parade, Cardiff, CF24 3AB, United Kingdom, DebnathK@cardiff.ac.uk