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The power sector is not only struggling to manage the US dollars needed to keep the country’s power plants operational but suffering from an acute shortage of taka also.
The crisis has reached such an extent that the Bangladesh Power Development Board (BPDB), due to the shortage of taka, is unable to make any plan to raise the dollar it needs for clearing the outstanding bills of the country’s power plants.
Sources concerned said the BPDB’s outstanding bills for electricity purchases from power plants have now reached around $4 billion, resulting in the recent fuel shortage at the power plants. Several BPDB officials told The Business Post that the sourcing of dollars has become more difficult due to the shortage of taka. Even if the necessary amount of taka is managed, the banks cannot provide sufficient dollars in exchange.
The crisis has been created as the Ministry of Finance failed to pay the subsidy on time. The BPDB has recently sent an urgent letter to the Power Division asking for Tk 38,000 crore, the accumulated due from January 2022 till May last, the BPDB officials informed.
The BPDB is the only bulk electricity buyer from public, private, and joint initiative power plants in Bangladesh. Besides, the company also imports electricity from India. BPDB pays fuel price and capacity charges in dollars.
The BPDB sources said the price of per unit electricity produced by coal-fired power plants is Tk 12, diesel-run plants Tk 36, furnace oil-run plants Tk 18, gas-fired plants Tk 3-4, and solar-driven plants Tk 16. On average, BPDB spends about Tk 11 to buy per unit of electricity.
On the other hand, BPDB sells the electricity to the country’s six power distribution companies in local currency at a wholesale rate of Tk 6.70 per unit, counting a loss of Tk 4.30 per unit. The finance ministry provides Tk 4.30 as a subsidy to BPDB.
Sources from the finance department of BPDB said since January 2022, the finance ministry is not providing any subsidy to the power sector. That is why BPDB is facing an acute fund shortage and every month at least Tk 5,500 crore is being added to the outstanding bills. In this situation, BPDB wants to borrow Tk 10,000 crore from the bank to manage its working capital.
According to BPDB, the board’s outstanding bills, accumulated from September 2022 to April 2023, to the IPP and rental power plants are Tk 25,070 crore. Out of which Tk 12,483 crore is owed by furnace oil-fired power plants, Tk 4,474 crore by gas-based power plants, Tk 7,621 crore by coal-fired plants, and Tk 492 crore by solar power plants bills.
Apart from this, the outstanding bills of state-run power plants from August 2022 to April 2023 are Tk 6,521 crore. The outstanding gas bills of BPDB’s own power plants are Tk 1,515 crore.
In addition, India’s Adani Group’s $100 million and bills for electricity imported by the government from India are also outstanding. In total, the accumulated outstanding bills are Tk 40,000 crore, or $4 billion, according to the BPDB finance department.
In the letter sent to the Power Division recently, the BPDB said the IPPs are failing to pay the fuel import bills due to the huge amount of outstanding bills owed to BPDB. As a result, it has become difficult to maintain an uninterrupted power supply to factories and households.
In this situation, to continue an uninterrupted power supply and pay monthly bills to power companies regularly, BPDB requested the Power Division to take Tk 10,000 crore from banks as working capital.
BPDB Director (Accounts) Rezaul Karim said, “The board is not supposed to have any unpaid bills. The finance division’s failure to provide the subsidy on time paved the way to the recent crisis.”
He said that BPDB does not currently have the money it needs to manage the dollars for clearing the outstanding bills of the power plants.
Sources said BPDB’s situation is the worst in the case of Adani Group, IPP, and Payra Power Plant; because if the bill is not paid within 30 working days after submitting the bill, Adani Group is entitled to get a penalty as per the PPA.
The Adani Group has been supplying 748MW of electricity from the first unit of its Godda Power Plant since March last. The company so far has submitted three bills, but BPDB has not paid any.
On the other hand, according to sources, bills of the IPPs are supposed to be paid within 45 working days, but there is no provision for any penalty in case of failure. However, IPP owners have demanded a penalty from BPDB.
Besides, Bangladesh China Power Company Limited (BCPCL), the owner of the Payra Power Plant, will be at risk of repaying the loan from China Exim Bank.
BCPCL Manager Shah Abdul Mawla recently told The Business Post, “The BCPCL is supposed to repay its loan to China’s Exim Bank selling electricity. Now, if the money selling electricity is not received, the power plant will be closed and the amount of loan repayment will increase. There is a risk for Bangladesh of becoming a defaulter.”
On the condition of anonymity, a BPDB director said the government had given priority to political considerations during the construction of power plants and power purchase agreements. As a result, PDB has turned from a profitable institute to a loss-incurring company.
