Looking at the total power generation capacity of the country's power sector, both of the state-run and the privately operated power plants, one would like to be impressed. A recent report says, on Tuesday (September 5) the power sector's daily power generation capacity was 24,171 MW. However, the actual power generated two days back (on September 3) was 13,824 MW against a demand for 14,399 MW. Clearly, there is a big gap between the generation capacity vis-à-vis the actual demand for power and the supply of it in the country. So, the question is, what is this humongous generation capacity of the country's power sector for? If anything, it has only caused to balloon the bill for capacity charges against the power plants to stupendous proportions! On this score, the September 5's disclosure of the state minister for power, energy and mineral resources at the Jatiya Sangsad about the colossal amount of capacity charges (totalling Tk1.04 trillion) that the incumbent government had to pay only to the private sector power companies alone since it took office in 2009, says it all. The break-up provided by the minister shows that of the capacity payments recipients, 82 are the so-called Independent Power Producers (IPPs), while 32 are the rental power plants. Consider that in FY 2017, total capacity payments to the private sector power companies amounted to around Tk 53.76 billion, which in FY2023 jumped to as high as Tk 280 billion.
That in other words means, each financial year since FY2017 saw close to a hundred per cent incremental change in capacity payments to the private sector power plants over the previous fiscal year. This is indeed unprecedented. The change in capacity payment in the last one year, according to a report, has gone up by 16.7 per cent. Once the total power generation capacity of the country further rises, as envisaged, to 31,000 MW by 2025, the excess capacity will also soar, in tandem, to 11,191 MW-a 36 per cent increase! According to reports, to meet these extra bills for the capacity payment, the Bangladesh Power Development Board (BPDB) has been taking subsidised credit from the government every year. Reports further say, between FY 2017 and FY2023, the subsidies have risen from Tk40 billion to a whopping Tk230 billion. In the current fiscal year, the figure is projected to touch Tk320 billion. Sadly, this escalation of subsidy amounts is still not enough to settle the BPDB's capacity payment bills.
Evidently, the losses the government's power sector agency is incurring are also galloping every passing year. In this connection, the Implementation, Monitoring and Evaluation Division (IMED) of the planning ministry predicted sometime back that in FY23 and FY24, BPDB will face a total loss of more than Tk1.13 trillion, which comes to an average yearly loss of about Tk57.66 billion. Needless to say, the capacity charges are to blame for a large part of the losses the government's power agency is incurring. It is important to note here that it is not only the IPPs, rental and quick rental power companies that are pocketing the capacity charges just sitting idle. There are also state-run power plants, some 42 in number, that practically produce no power but eat up substantial amount of state subsidies.
Since this excessive capacity of the power sector is not paying, say, by drawing matching industrial investments,wasting public money on it hardly makes sense.The government needs to seriously think of retrenching these burdensome power plants in a phased manner. The sooner the decision is taken, the better for the economy.
