Euphemistically-coined financial penalty called capacity payment now branches out as LNG-fired power plants emerge as new claimants, with an almost laid-off one already billing against unused electricity, sources say.
The Meghnaghat Unique 584- megawatt one, which happens to be Bangladesh's first power plant fueled by liquefied natural gas (LNG), went into commercial operation a couple of months back. "But the plant has been kept idle for most of the days over the past two months since its commercial operation date (COD) was registered," says a senior power official.
Such state has surfaced as the state-run Bangladesh Power Development Board (BPDB) did not purchase electricity from this plant, the official told the FE writer.
He could not figure out the amount of capacity payments the BPDB would owe to the private owner owing to its failure to purchase electricity from the newly built Meghnaghat Unique power plant.
Capacity payment is a sort of penalty for the lone buyer of electricity from power plants - BPDB -- that is bound by deals to pay to plant owners in the event of failure to buy a certain portion of power readily available with them.
The government has long been paying capacity charge to independent power producers (IPPs), rental, and quick-rental oil-fired and coal-fired power plants, says the BPDB official, and now comes the new dimension to payoff for no use of power.
"Addition of LNG-fired power plants into the capacity-payment basket would add up to the already-worsening financial woes of the BPDB," he adds.
According to state minister for the Ministry of Power, Energy and Mineral Resources Nasrul Hamid, the government had paid a total of around Tk 1.05 trillion until August 2023 only as capacity payments to power -plant owners.
The amount of capacity payments payable to power plants is, however, rising because of ballooning overcapacity beyond the actual need, analysts say.
The overall electricity generation in the country currently comes to around 11,281 megawatts, less than half the aggy capacity of 26,844MWs.
The Meghnaghat 584MW power plant is among three LNG-fired ones in private sector that had attained government permission to build plants several years back under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 bypassing competitive tenders.
Summit Meghnaghat-II 583MW and 718MW plant owned jointly by India's Reliance Power and Japan's JERA, having the combined electricity-generation capacity of 1,885MWs, are the two other LNG-fired power plants that are awaiting COD to go for generating electricity commercially.
Almost 80 per cent of works on LNG-fired Rupsha power plant, owned by state-owned North-West Power Generation Company Ltd (NGPGCL), have been completed and the first unit of the 800MW facility is scheduled to start operation in September, a senior NWPGCL official said.
The BPDB has power-purchase agreements (PPAs) with all these power plants.
Three other LNG power plants are being readied for operation at a time when some three dozen small-to medium-sized gas-fired power plants with a combined generation capacity of around 3,041MWs are shut only for gas crisis, according to official data available with BPDB as on March 23, 2024.
"We attained COD on January 20 after completing test," says Anupam Hayat, chief financial officer or CFO of the Meghnaghat Unique power plant.
He hopes that the power board will purchase electricity from this plant considering its least cost in generating electricity.
Sources have said power- evacuation bottleneck is hindering the BPDB from purchasing electricity from the newly built LNG-fired power plant despite its low generation costs.
State-run Power Grid Company of Bangladesh (PGCB) could not construct six necessary substations, which is creating evacuation problem of electricity to be generated from the new power plant, they said.
The power substations are unlikely to be readied before December, meaning that several other LNG-fired power plants, that are almost ready for operation, will not be able to run even after obtaining CODs.
The BPDB will have to count additional costs as capacity payments as a consequence, sources added.
Contacted for his view on the power paradox, energy adviser of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam demanded immediate cancellation of agreements that have exceeded tenures to check "waste of state money".
The private power-plant owners have already "gained heavily" against their investments as most of them got extension of their plants' tenures, he says to justify his suggestion.
"We don't require too many power plants to count huge capacity payments every year," he adds.
Energy expert Prof Mohammad Tamim accuses a vested interest group of projecting inflated electricity demand on money-spinning motives.
"This resulted in the installation of power plants having more than required demand and entailing huge capacity payments," notes Mr Tamim, who was a former special assistant of a caretaker government.
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