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The Financial Express

Private power plants bag Tk 86.09b in FY '20

| Updated: September 25, 2020 15:51:51


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The country's private sector-owned power plants, especially the oil-fired ones, bagged around Tk 86.09 billion from the government as 'capacity payment' in last fiscal year (FY), 2019-20.

The plants got the fund as incentive from the government against the unused capacity of their plants.

The state-run Bangladesh Power Development Board (BPDB) made the payment to the private power plants under contractual obligation for keeping their plants idle.

However, the amount of capacity payment was 3.58 per cent lower than that of FY 19, a senior official of the BPDB told the FE on Tuesday.

Retirement of several oil-fired power plants after their extended tenure and 'non-readiness' of several privately-owned oil-fired power plants to generate electricity have reduced the capacity payment in last fiscal compared to that of the previous year, he said.

Capacity payment is a sort of penalty for the BPDB that it pays to the plants, if the government fails to buy a certain portion of power readily available with them.

As per power purchase agreements, the penalty is calculated on the basis of around 40 per cent plant factor of the power plants, including the oil-fired rental and quick-rental power plant ones.

Energy experts and industry insiders deem the payment as the consequence of awarding 'more than required' expensive oil-fired power plants to the private sector.

According to the BPDB, it had to pay around Tk 89.29 billion to privately-owned power plant sponsors as 'capacity payment' in FY 19.

The payment was around Tk 62.41 billion in FY 18, Tk 56 billion in FY 17, Tk 53.76 billion in FY 16, Tk 50.43 billion in FY 15, and Tk 47.14 billion in FY 14.

The BPDB had to pay Tk 54.90 billion in FY 13, Tk 50.01 billion in FY 12, Tk 29.73 billion in FY 11, and Tk 17.90 billion in FY 10.

Rental and quick rental oil-fired power plants were first allowed in FY 10.

Currently, dozens of oil-fired power plants are in operation in the country.

Most of the plants were awarded following unsolicited offers under the Speedy Supply of Power and Energy (Special Provision) Act 2010. The law has a provision of immunity to those involved with the quick fix process.

The government allowed private entrepreneurs duty-free import of furnace-oil to run their plants and 9.0 per cent service charge along with import cost as incentive.

According to the BPDB statistics as of September 21 (Monday), countrywide electricity generation during day peak hours was 9,987 megawatts (MW), which is 49 per cent of the total installed capacity of 20,383 MW.

Electricity generation during evening peak hours on the same date was 11,925 MW, which is 58.50 per cent of the total capacity.

The BPDB is counting capacity payment for keeping around half of power plants idle for lack of demand.

When contacted, energy adviser of Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam demanded immediate cancellation of agreements with the rental and quick rental oil-fired power plants to check wastage of state money.

The private sector power plant owners have already gained heavily against investment, as most of them got extension of their plants' tenure, he explained.

"We don't require too many power plants to count huge capacity payment every year," he added.

Energy expert and former special assistant to a caretaker government Prof Mohammad Tamim accused a vested interest group for projecting an inflated electricity demand in the country.

This resulted in the installation of power plants with more than required demand as well as counting of huge capacity payments, noted Mr Tamim.

azizjst@yahoo.com

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