The Bangladesh Power Development Board (BPDB) is grappling with a staggering debt of Tk 45,000 crore, a consequence of widespread irregularities and corruption within the organisation.
As experts warn of looming challenges for the interim government in securing necessary funds and foreign currency to settle BPDB's mounting outstanding bills, concerns continue to grow over the financial practices that have aggravated the crisis. The purchase of electricity at inflated prices, often under a controversial law, the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010, allowing massive cost manipulation, coupled with inefficiencies and mismanagement, has deepened the financial woes of the state-run entity, opine sector insiders.
The failure to sustainably address these issues simply through increasing retail electricity prices and the governmental mismanagement of providing subsidies whenever any issues arise, pushed BPDB deeper into debt.
Following the ousting of Awami League (AL) supremo Sheikh Hasina and the fall of her autocratic government, BPDB submitted a detailed financial report to the Power Division, which is expected to be presented to Chief Adviser of the interim government Dr Muhammad Yunus. The report was made to emphasise the economic strain the organisation’s faces.
Several state-owned power plants have already issued letters to BPDB demanding payment.
BPDB is entangled in a web of unpaid bills, including gas charges owed to several companies under the Petrobangla umbrella, payments to Independent Power Producers (IPPs) and rental power plants, dues for electricity imports from India, including those from Adani Power, and outstanding debts to coal-based power plants like Payra and Rampal.
BPDB's operating model works by buying electricity from power plants under purchasing agreements and selling it at wholesale rates to distribution companies, such as the Bangladesh Rural Electrification Board, DPDC, and DESCO, which then retail it to consumers.
However, the selling price set by BPDB creates a revenue shortfall, which has a long-standing tradition of being covered by government subsidies. However, the ongoing economic crisis has severely disrupted these subsidies for over two years, with the Ministry of Finance struggling to disburse funds due to a shortage of both US dollars and taka.
This financial strain has left BPDB unable to pay its energy bills or settle dues with public and private power plants.
Meanwhile, a senior BPDB official, wishing anonymity, stressed the crucial need to maintain a stable energy supply to keep the wheels of the nation's industries turning and ensure public well-being. Hence, in preparation for the transition to the new interim government, BPDB has compiled an income-expense report to provide a clear picture of the power sector's dire financial status.
The official emphasised that BPDB requires at least $40 million per day from Bangladesh Bank to meet its liabilities, but is currently receiving only $5-7 million a day.
Professor M Shamsul Alam, an energy expert, has warned that Bangladesh's electricity and energy sector has reached a critical stage, describing it as a "life-and-death" issue for the nation. He urged the government to address the financial shortfall by cutting unnecessary costs and halting or suspending development projects to ensure the continued supply of energy.
"Under no circumstances should the price of electricity and gas be increased, as this would place an additional and undue burden on the people," Alam emphasised.
The BPDB report reveals the extent of the outstanding bills, calculated using both the official exchange rate set by Bangladesh Bank and the open market rate. At the official rate of Tk 117 per dollar, BPDB’s total liability stands at $3.846 billion. However, when calculated using the open market rate of Tk 124 per dollar, the liability escalates to $4.354 billion.
Meanwhile, sources within the Ministry of Power, Energy, and Mineral Resources have disclosed that officials are compiling files on projects marred by irregularities and corruption. These projects, many of which had been executed without tenders under the controversial 2010 act of quick enhancement of electricity and energy supply, have faced widespread criticism.
With the new government poised to take office, the sources added that there is growing anticipation that these files could be requested for review at any moment, potentially triggering a deeper investigation into the sector's contentious practices.
