Members of the fallen regime of the Awami League, lobbyists, private business and independent power producers became major stakeholders in power and energy sector bypassing due processes, the 'White Paper on the State of Bangladesh Economy' revealed on Sunday.
The energy adviser, the state minister for power and the power division were all conduits of corruption, according to the paper.
Every single deal from a small solar plant to a mega project like Adani Power was approved by none other than the Prime Minister's Office (PMO).
While groups like Summit, Reliance and United were picked for 350+MW gas plants, a complete newcomer like S Alam Group got 1320MW coal plant contract.
Many of the plants did not have any firm commitment of gas supply and are now stuck with stranded capacity, thereby increasing cost, debt and subsidy, prolonging public sufferings.
The 24,000MW power generation target set for 2021 was claimed by wrongfully including non-grid captive power of 3,000MW and 450MW of Solar Home System.
The previous government portrayed a rosy economic future with hyped-up growth figures, promising energy security based on imported fuel.
Now, 65-per cent primary energy needs to be imported at an annual cost of $10 billion and by 2030 it will rise to $20 billion. This will put pressure on the forex reserve, it added.
The already repealed Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 was one of the most contentious laws ever enacted in the energy and power sector.
Initially established for a four-year period to address an emergency supply situation, it has been extended multiple times, resulting in widespread corruption and arbitrary decision-making.
Even before the enactment of the Special Provisions Act, seventeen rental plants were awarded contracts through 'negotiations' in 2010, circumventing the Public Procurement Rules (PPR).
The reference capacity payments for these plants were as high as $30.69 per kW-month for gas (Aggreco, Ashuganj, 80 MW) and $21.14 per kW-month for heavy fuel oil (HFO) (DPA Power, Pagla, 50 MW), while the lowest tendered offer was just $8.70 per kW-month for HFO (RZ Power, Thakurgaon, 50 MW).
These contracts were in violation of the law, resulting in substantial capacity payments for the government and allowing the companies to reap excessive profits, according to the white paper.
The contracts were renewed several times despite the fact that, after the initial contract period, they should have operated on a 'no electricity, no payment' basis, as the companies had already recouped their full investment during the initial period.
Many argued that these violations fostered a group of crony capitalists in the country who benefited from government patronage and were also involved in the transfer of wealth out of Bangladesh.
Gazprom, a Russian state agency, was also engaged under the Special Provisions Act 2010 to drill 20 wells for BAPEX, Bangladesh Gas Field Company Ltd (BGFCL), and Sylhet Gas Field Ltd (SGFL) instead of a government-to-government (G2G) deal, it lamented.
The average drilling cost for Gazprom was about $22 million per well, excluding VAT and taxes, while BAPEX completed similar drilling for approximately $10 million.
A competitive bidding process could have potentially secured a much lower drilling costs, saving Bangladesh millions, cited the paper.
In total, 41 IPP contracts were awarded under the Special Provision Act 2010, with a combined capacity of 6,308MW. All contracts signed under this Act require thorough scrutiny.
The capacity payments varied significantly among these contracts, with some being benchmarked against the highest rates found through the open tender method, allowing for substantial profits on unsolicited offers.
Taking advantage of such guaranteed payment the capacity market was flooded with over supply through unprecedented corruption, the white paper noted.
The average annual plant factor or capacity utilisation for oil-based rental plants has been below 50 per cent. Typically, these are meant for peaking power supply, but their widespread use as underutilised baseload plants was an expensive operation that increased the cost of generation.
Capacity payment became a burden for the exchequer, it said.
Six HSD-based IPP plants with a total capacity of 1000MW were awarded for a 5-year period in 2018. The reference capacity payments were close to $20 per kW-month.
None of these ran more than 10 per cent on average of their capacity for the entire contract period.
This means 90-per cent capacity payment was made for 1000MW without taking any electricity.
These were only used in some extreme situations that could easily have been handled by HFO plants.
These power plants were awarded purely on a political consideration and through underhand dealing promoting crony capitalism.
Since 2014-15, HSD and HFO power plants awarded under the Special Provision Act were paid Tk 155.51 billion and 91 billion capacity payment respectively.
The average plant factors of HSD and HFO in the last five years were only 32 per cent and 9.22 per cent respectively.
Assuming at least 65 per cent plant factor the oil-based power plants under Special Provision were paid Tk 100-billion additional capacity payment.
The rental plants that were awarded in 2010-11 made as high as 35-per cent profit against a standard 15 per cent.
The windfall would not be less than 100 billion, the white paper noted.
Assuming the underutilisation of other power plants (gas, coal), the total excess capacity payment would not be less than Tk 360 billion in the last 15 years.
The paramount allegation of corruption was in awarding power plants in the form of commission.
Obviously there is no documentation of such transaction but 10 per cent of the project cost is a conservative estimate.
With an investment of $30 billion in generation since 2010, at least $3 billion changed hands as kick back.
The corruption and nepotism practiced at the top level have trickled down to every project.
Some of these dishonest practices are widespread across the board including -- employing people without advertisement and through illegal financial transactions, giving contracts to the same group of people under different company names, with or without tenders, for ease of corruption, favouring individuals related to high-ranking ministry officials, agency decision-makers, company board members, or other key influencers (politicians) in awarding jobs or sub-contracts, selling items at much lower than market rates (e.g., ash from coal plants) directly or through sham tenders, purchasing items at higher than market rates (e.g., prepaid meters229) through collusive tenders involving limited suppliers under different company names, changing contract conditions after awarding (e.g., the Summit Meghnaghat 335 dual fuel power plant switched from HFO to HSD without changing capacity payment or heat rate).
Special terms given to favoured groups (e.g., 1. United Power receives gas at the IPP rate (Tk. 15.75 per cubic metre) instead of the captive rate (Tk. 30.75 per cubic metre), selling power at the commercial rate to the Dhaka and Chittagong EPZ, thus raking in abnormal profit, the 200MW unsolicited Teesta solar plant of Beximco, awarded in 2016, was granted a tariff of $0.015 per kWh in 2023, whereas all other plants were offering $0.010 per kWh due to reduced panel costs and much higher efficiency.
The continuous use of liquid fuel with low capacity usage (diesel plant factor less than 10 per cent and increasing production from imported fuel (currently approximately 65 per cent) caused the generation cost to shoot up from Tk 6.61 per kWh in 2020-21 to Tk 11.51 per kWh in 2023-24.
Since 2008-9, the BPDB has been given cumulative subsidy of Tk 1.44 trillion.
Azizjst@yahoo.com
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