Rental power plants, introduced in 2010 in the country for the first time, were found to be 'necessary evils' in view of severe power crisis prevailing at that time. Those have so far proved to be expensive and the government's subsidy-guzzling. Policymakers had initially promised to get rid of those within a short period through the building of large and medium conventional power plants. But the promise has remained largely unmet.
After long seven years, the rental power plants are there with their number going up every year and the government's expenditure on account of subsidy payment on power purchase from these power plants soaring continuously.
In 2010, the government adopted a piece of legislation, styled, the Speedy Supply of Power and Energy (special provision) Act for a period of two years. The primary goal behind the introduction of the law was unhindered implementation of rental and quick rental power plants. However, the government, later, also used the law in other areas of the power and energy sector.
Under the law, all types of power and energy projects, including the import of natural gas, coal, LNG and petroleum products, as well as the extraction of mineral resources, can be implemented quickly -- without following the usual tendering process.
Electricity generation, transmission and distribution projects are also covered under the Act.
The legislation states that any activity which comes under its purview, or any official or employee implementing such activities cannot be subject to any legal action. So far, the government has extended the tenure of the law thrice, the latest one for four years, ending in October 2018.
Will the indemnity law expire as scheduled? None can be certain about it though Finance Minister AMA Muhith in his last budget speech said that the dependence on rental power plant will be 'gradually reduced from 2018 onwards when a comfortable power supply situation can be ensured'.
But an element of uncertainty is there since some opposite developments, reportedly, have taken place in the meanwhile. The Power Division has recently advised banks --naturally, the state-owned ones---to arrange funds worth Tk 200 billion for setting up rental and quick rental power plants having an estimated generation capacity of 2,000 megawatt within the next six months. The government appears to be in a haste to set up the power plants. The next general election which is scheduled to be held at the end of next year or in early 2019 might have influenced the government's decision.
The power situation is no doubt better than any time before. But power subscribers are counting a heavy cost. Their monthly power bills have risen at least threefold during last seven years. This is hurting them directly. Indirectly, a substantial amount of their money given to the government as tax is being spent as subsidy on the purchase of power from the rental and quick rental power plants.
What is more troubling is the lack of transparency and accountability in granting permission to private sector people for setting up these plants and purchasing electricity from those by the relevant government agencies.
In a country where there are allegations of financial irregularities and political interference in open bidding galore, one can guess the situation when such bidding process is bypassed, that too under legal protection.
Reports on financial irregularities in capacity payment and other areas are often published in the media. But the relevant authorities usually do not attach uch importance to those.
There is no denying that the latest move to set up more rental plants with bank financing worth about Tk 200 billion, if implemented, would go against the government decision to phase out these temporary power generation facilities within the next few years. Naturally, private investors---generally chosen through political connections -- would not put in their money in such ventures for a year or two.
One plausible reason for the government to allow a few more new rental plants could be its failure to build sufficient number of large and medium conventional power plants both in private and public sectors. A number of such plants, mainly coal-fired ones, are in the process of implementation. But they are unlikely to be completed within the next two to three years. So as a stop-gap arrangement, the power division has decided to rely on the expensive mode of power generation at the cost of poor subscribers.
People involved in rental businesses, officials and others in power sector involved have valid reasons to favour continuation and enlargement of the fleet of rental power plants. These plants do pay these people handsome dividends, both in due and undue amount.
Allegations have that a number of public sector power plants are kept shut deliberately citing 'technical' reasons to make way for purchase of power from the rental plants. Capacity payment, reportedly, is another mode of irregular transactions. The truth is that rental power plants have helped meet the power crisis but, at the same time, they too have added a very non-transparent chapter to this very important sector.
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