Photo : Messenger
One of the most discussed irregularities in the power sector over the past decade is looting in the name of quick rental. Apart from this, the fact that thousands of crores of money have gone into the hands of a few companies in the name of capacity charges has also come to the fore in recent times. However, since the formal start of load shedding with the announcement in July last year, discussions on these two issues have intensified. Images of various irregularities and looting in these two sectors started appearing in the media.
Quick rental power plants were started urgently to meet the demand of electricity at one time. With the passage of time, which has now become a thorn in the neck. Keeping these centers sitting for a long time, they have to pay capacity charges day after day. According to the data of the Bangladesh Power Development Board (PDB), the capacity charge in the financial year 2023-24 was at Tk 32,000 crores, most of which went to the operating expenses of these rental or quick rental power plants. In the previous financial year, i.e., the financial year 2022-23, its amount was at Tk 28,000 crore and in the financial year 2017-18, it was at Tk 5,600 crore. The amount of capacity charge has increased almost six times in just five years due to various reasons, including the devaluation of Taka.
In fact, Quick Rental Power Plant is a private power generation plant, which is quickly rented during times of excess demand for electricity. Generally, if there is any extensive damage to the power infrastructure due to natural disasters such as earthquakes, floods, floods etc. or in war-torn countries, quick rental power plants are used to ensure immediate short-term power supply. But in Bangladesh in 2007-09, during the caretaker government, this method of power generation was taken up, which the next government expanded for the purpose of rapid power generation. Around 2009, due to shortage of power generation, this private system was started. To avoid the legal controversy of this system, the government enacted the 'Immunity Act 2010' and the immunity was further extended later. At that time, many companies expressed concern about corruption and increase in electricity prices, but then load shedding decreased a lot. The cost of power generation at the start of this system was at Tk 2.55 per unit. Most such plants in Bangladesh run on imported liquid fuels. Energy experts feel that this method is not sustainable, as currently, the power generation is almost double the demand, yet the government has to pay for the power generation plants which are not being used.
According to the information of the Ministry of Power, Energy and Mineral Resources, the current total production capacity of the power plants installed in the country is at 29,727 MW and among them, the production capacity of grid-based power plants is at 26,504 MW. The demand is at from 13,500 to 17,000 MW and against this, the production is from 13,000 to 15,000 MW. According to Power Grid Company of Bangladesh data, on April 22, 2024, the highest electricity generation in the country was at 16,233 MW and the previous day, at 15,666 MW, electricity was generated. It is known that against the peak demand of electricity during summer in FY 2022-23, the peak generation was at 15,648 MW on April 19, 2023. As the demand for electricity decreases in winter, the maximum production of electricity drops to from 10,000 to 12,000 MW.
Experts say that most of the subsidy money in the power sector is being spent to meet the capacity charges of these private rental-quick rental power plants. Even if these plants do not generate electricity, a fixed fee is paid to the plants based on their generating capacity, the entire amount of which is borne by the government. Experts believe that if this amount of money is used for any other development activities of electricity, it would be beneficial for the country. Considering the importance of power and energy sector in the proposed budget for the financial year 2024–25, Tk. 30,317 crore has been allocated for this sector. Out of this, Tk. 29,230 crore has been earmarked for the power sector and Tk 1,087 crore has been allocated for the energy sector.
The Awami League government has paid Tk 1,38,786.50 crore as capacity charges to private power plants and quick rental power plants in the last 15 and a half years. The official name of capacity charge is the amount of subsidy that private power plants have to pay as per the contract if they sit idle. Energy experts have been critical of the country's power sector capacity charges since the beginning. They strongly criticised this method as an opportunity to loot the state's money. According to the information of the electricity department, capacity charges of Tk 1,38,786.50 crore have to be paid for 16 years from 2008-09 to 2023-24. Out of this, the amount of capacity charge payment in 10 years from 2008-09 to 2017-18 was at Tk 43,333.83 crore, whereas the capacity charge has been paid in six years from 2018-19 to 2023-24 financial year at Tk. 95,452.67 crores.
According to the information published in the media, in the last 14 years, about Tk. 10,623 crores of capacity charge has entered the pocket of Summit Power concerned by the outgoing government, which is about 12 percent of the total capacity charge. UK-based company Agrico International is in 2nd position with Tk 7,932 crore (8.84 percent) and Malaysia-based Chinese company Erda Power Holdings is in 3rd position with Tk 7,523 crore (8.39 percent). 4th United Group Tk 6,575 crore, 5th Rural Power Company Limited (RPCL) Tk 5,117 crore, 6th Bangla Cat Group Tk 5,067 crore, 7th Payra Coal Power Plant developed with joint investment of Bangladesh and China Tk 4,550 crore, 8th Orion Group Tk 4,525 crore, 9th Khulna Power Company (KPCL) Tk 4,054 crore, Hosaf Group (10th) Tk 2,699 crore, Mohammadi Group (11th) Tk 2,544 crore, Doreen Group (12th) Tk 2,183 crore, Max Group (13th) Tk 2,154 Crore Taka, APR Energy (14th) of the United States Tk. 2,087 crore, Sembcorp of Singapore (15th) Tk. 2,057 crore, Shahjibazar (16th) Tk 1,968 crore, Sikdar Group (17th) Tk 1,842 crore and Confidence Group (18th) Tk 1,574 crore, US-based New England Power Company NEPC Consortium's Haripur Power Plant (19th) Tk 1,528 crore, Sri Lanka's largest power plant Company Lakshdhanvi & Associates (20th) Tk. 1,401 crores, Sinha Group (21st) Tk. 1,391 crores, Anlima Group (22nd) Tk. 1,274 crores, Baraka Group (23rd) Tk. 1,247 crores, Regent Group (24th) Tk. 1,037 crores and Energypack (25th) Tk 1,027 crore.
Apart from these domestic and foreign companies, while importing electricity from India, they had to pay capacity charges of about Tk. 11,015 crores in 9 years. Electricity import from the country started in the 2013-14 fiscal year and that year the capacity charge was around Tk 501 crore, in 2016-17 fiscal year the capacity charge payment increased to Tk 1,068 crore and in 2021-22 fiscal year it was at Tk 1,724 crore. Even though power import from India is less, there is no scope to reduce the capacity charge. In this way corruption is going on in the power sector in the name of quick rental and the festival of wastage of money or looting is increasing in the name of capacity charge.
It was widely discussed when a research report prepared by a senior official of a government organisation was published. The report published in the middle of last year characterised the country's power plant capacity charge as a 'robber model'. According to the report, only 56 percent of the total capacity of power plants installed in the country is produced. This is because fuel and coal-fired power plants have high cost per unit of power generation. The government has to subsidise a huge amount of money to buy electricity from these power plants at extra cost and supply it to consumers.
Currently, the power generation capacity in the country is at 29,727 MW but only 14,000 MW is being produced. But production capacity is being increased without utilization. The power generation capacity that the government has built now will not be needed even in 2030. In six years from today, the demand could reach at 19,400 MW. If 25 percent reserve is taken, then the power capacity is at 23,252 MW. But despite the increase in capacity, there is load shedding in the country. Average load shedding is at 1100 MW in summer. The electricity generation capacity in the country is now 46.4 percent more than the demand. But this ability has become a headache for the economy. The government has made an agreement, whether they buy electricity or not, they have to pay at the end of the month. Even if they don't produce, the country's power plants have to pay capacity charges. In the name of this charge, thousands of crores of money are now going from the government fund. In the name of electricity production, the looting festival is going on. It is important to stop this looting at any cost for the welfare of the economy.
The writer is a Banker and Columnist.
Messenger/Fameema
