Policymakers do not want to hear anything about 'capacity payment'. Yet, capacity payment simply cannot be ignored because it remains the cornerstone of the lop-sided energy sector planning that successive governments have been loath to let go. It falls under 'The Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010' that has earned enough infamy for allowing contracts to build power plants in this country, regardless of fuel/solar energy it is run on. The very opacity of the Act and the mantra based on the principle 'no questions asked' method of awarding contracts leaves little to imagination why such stupendous amounts of public money have been squandered in the name of capacity payment.
The ambiguity of the Act allows for neither any transparency of nor accountability, including parliamentary debate, for the terms of these contracts. Apparently, Bangladesh is living in a democratic country where the rule of law ought to reign supreme. Then can one not ask why is it that policymakers refuse to bring back competitive tendering where all parties have a level-playing field to compete and win contracts? Sadly, these questions keep coming up because capacity payment has gone through the roof and power produced today depends on either imported fossil fuels or natural gas - the former is too expensive and the latter is depleting at an alarming rate.
Since the government had planned for a number of large gas-fired power plants to join the energy mix, it would have also planned for large-scale exploration of natural gas reserves in the country. The latter was left alone since the policymakers assumed that imported liquefied natural gas (LNG) would always be within reach and the economy would continue to gallop at 6.0 + per cent growth per annum and consequently everything would be great. Unforeseen geopolitical tensions never really factored into the grand scheme of things and today, the economy is left to its own devices to pick up the pieces. A report published in this newspaper says, "Sources said five new facilities with the total generation capacity of 2,673 megawatt have either completed construction or are nearing completion to initiate test runs and then come into operation. Of the plants, two are owned by the private sector and three by the public sector."
The very nature of capacity payment means the national exchequer has started to pay capacity charges to private-sector owned power plants from Day 1 of completion, no matter if they cannot go into operation due to shortage of gas. The question is, why weren't these contracts annulled because the economic downturn started back in 2019 with the onset of Covid-19. A brief respite came in 2020 but then the world was turned on its head with the commencement of the Russo-Ukrainian war and prices of food went through the roof. By the government's own admission, billions of dollars had to be spent to procure foodstuffs and with the onset of sustained recession, the major markets (EU, Britain and USA) where Bangladesh sends the bulk of its exports are importing less.
It is time the agreements with rental power plants were annulled. Capacity payments are bleeding the country white. The country cannot even pay for the cross-border electricity imports, natural gas produced locally by foreign companies or meet import bills of LNG/fossil fuel. The economy cannot sustain any wasteful payment.
mansur.thefinancialexpress@gmail.com