Home ›› 27 May 2022 ›› Front
The Bangladesh Power Development Board (BPDB) says it has proposed increasing wholesale electricity prices because of gas shortages, but its data shows supply was adequate in the last four fiscal years.
Besides, it has not said anything about capacity charges of Tk 13,000 crore that it pays every year to the private power plants. This money is a huge burden for the government, experts say.
In its latest proposal to increase power tariff, the BPDB said the gas-fired power plants were not getting fuel due to supply shortages and hence it was forced to increase production from the diesel- and furnace oil-based plants.
It also said it was facing losses as diesel and furnace oil prices were high. Moreover, it said power generation from the diesel- and furnace oil-based plants has gone up, but data shows the increase is insignificant.
The BPDB says the total daily generation capacity of the gas-fired power plants is 11,250MW. The Bangladesh Energy Regulatory Commission has directed Petrobangla to supply 1,320MMCFD gas to these plants, but BPDB officials say supply currently stands at 1,111MMCFD.
That is why electricity generation from the gas-fired plants is a little more than half the capacity, standing at 6,000MW per day, meaning the plant factors of these plants are low, the state-owned agency said.
M Shamsul Alam, dean of the electronics and telecommunication engineering department at Daffodil International University, said it was true that the gas-fired power plants were facing supply shortages.
“But it is also true that the amount of electricity they produce is not commensurate with that of gas supplied to them,” he said.
The energy expert also said the government had recently imposed a 6 per cent tax on all types of power plants and a 5 per cent VAT on coal.
“If these were not imposed and diesel as well as furnace oil used in the plants was imported through Bangladesh Petroleum Corporation, the government could have saved Tk 8,833 crore annually,” he said.
When asked why the BPDB was proposing raising power tariff but was not addressing capacity charge payments, its Chairman Mahbubur Rahman told The Business Post, “I do not know.” He declined to comment further.
Businessmen at a recent press conference said the government was imposing liabilities on the people for the inefficiency and corruption in the power sector. To reduce unfair costs, they demanded the shutdown of the diesel- and furnace oil-based plants.
The BPDB data shows fuel supply to the gas-fired plants was 1,116MMCFD in FY19 while 67.61 per cent of the total electricity was generated by the plants. In FY20, gas supply was 1,134MMCFD while electricity generation was 71.12 per cent.
In the next fiscal year, gas supply was 1,066MMCFD while production was 59.29 per cent. In the first six months of the current fiscal year, gas supply was 1,111MMCFD while electricity generation was 59.61 per cent.
Besides, fuel supply to the furnace oil-fired plants was 2,510 million litres in FY19 and 16.65 per cent of the total electricity was generated by the plants. In FY20, supply was 2,063 million litres while production was 13.57 per cent.
In the next fiscal year, supply was 3,824 million litres while production was 22.25 per cent. From July to December of FY22, supply was 2,136 million litres while production was 23.51 per cent.
Moreover, fuel supply to the diesel-fired plants was 460 million litres in FY19 while they generated only 2.95 per cent of the total power. In the next financial year, fuel supply was 35 million litres while generation was 0.19 per cent.
In FY21, fuel supply was 132 million litres and generation was 0.6 per cent. In the first six months of the current fiscal year, supply was 116 million litres and production was 1.32 per cent.
During these four fiscal years, the government increased diesel, furnace oil, and gas prices only once.
Why BPDB faces losses every year
The BPDB said the current per unit wholesale electricity price is Tk 5.17 while the government is providing Tk 3.39 in subsidies. The power sector’s total subsidy is Tk 12,000 crore in this fiscal year so far.
Despite this, the BPDB is facing losses every year. In its proposal, it said it would lose Tk 30,000 crore in 2022 if wholesale electricity prices were not raised.
The Power Division says there are 152 power plants in the country and the total generation capacity is 25,056MW per day while the maximum daily demand is up to 14,000MW.
The Bangladesh Working Group on External Debt published a report last year, saying 37 private power plants were kept idle for most of the time in FY21 and Tk 13,000 crore had to be paid in capacity charges, which was 21 per cent more than the previous year.
A 2021 Centre for Policy Dialogue study said average electricity prices stood at Tk 600 per unit due to capacity charges.
Professor Shamsul said the government could have saved Tk 14,236 crore annually if rental and quick rental power plants were shut down.
