All is set for issuing Tk 120 billion worth of government bond for paying piled-up electricity bills to independent power producers (IPPs) against capacity charge and other payments, officials said.
The sovereign bond will be issued to 42 commercial banks who will make payment to the IPPs, Ministry of Finance (MoF) officials told the FE Saturday about the debt-settlement arrangements.
Interest rate on the bond is likely to be fixed at 7.5 per cent and the maturity may be within a range of 7-9 years.
"We have almost finalised the decision on the issuance of bond for the bill payment to the IPPs. The bond will be issued to the commercial bank where the IPPs have accounts. The banks will pay the bill to the power producers against the bond," said one MoF official.
"We will issue the bond for the banks. It will have maturity for 7-9 years. The interest rate will be nearly 7.5 per cent. The banks will pay the bill to the IPPs," he said.
The government is heavily in-debt to the IPPs for the outstanding bills against energy price and capacity charges, the MoF official said.
Since the Bangladesh Power Development Board (BPDB) and other state-run power distributors sell power at subsidised rates, the BPDB needs to get subsidies from the MoF to minimise the payments gap.
It is incumbent upon the power board, usually, to pay the bills against the electricity purchase from the private local and international company-owned IPPs, who came in the business under special legal arrangements amid crippling power shortages in the country.
According to the finance ministry, the government owed some Tk 230 billion as of October last to the IPPs working in Bangladesh.
The government paid Tk 6.0 billion in October against total outstanding bills to the IPPs and the rental power plants, they added.
In the last fiscal year (FY2022-23), the total government subsidy to the power sector was Tk 428.93 billion.
After several hikes in electricity prices last year, ostensibly to shift some of the burden to consumers, the amount of subsidy took a downturn. In 2022, the subsidy requirement was over Tk 40 billion per month, which has now come down to around Tk 30 billion.
As of last June, the amount of outstanding subsidy in the fertiliser and power sectors was about Tk 420 billion. Of that, bank debts amounted to Tk 255 billion.
Meanwhile, the Awami League government has paid a total of Tk 1.04 trillion to 82 independent power producers (IPP) and 32 rental power plants as capacity charge or rental payment during last 15 years.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid in parliament in September last year said 82 IPPs and 32 rental power plants in the country had received some Tk 1.04 trillion as capacity charge.
According to the state minister, the Bangladesh-China Power Company plant was paid the highest-Tk 74.55 billion-among the 82 independent producers while Aggreko International Projects was paid the highest Tk 23.41 billion among the 32 rental power plants.
Mr Hamid placed a list of the names of 82 IPP power plants and 32 rental power plants and the amount of money paid to them before the parliament session in September.
Among the IPPs, the government had paid Tk 54.75 billion to Meghna Power Limited, Tk 40.04 billion to Rural Power Company Limited, Tk 36.44 billion to Summit Meghnaghat Power Limited, Tk 28.24 billion to Semcrop NWPC Limited, Tk 27.88 billion to APR Energy, Tk 26.83 billion to Summit Bibiana Power Company Limited, Tk 25.58 billion to Haripur Power Limited, Tk 23.77 billion to United Ashuganj Energy Limited and Tk 18.53 billion to Bangla Track Power Unit-1 Limited over the last 15 years.
Among the rental 32 power plants, the government paid Tk 286.85 billion in capacity charge throughout three terms of the government, until its present renewed tenure.
The top ten power plants receiving rental payments are Aggreko International Projects (5 units) Tk 64.11 billion, Aggreko International Projects Tk 23.41 billion, Khulna Power Company Limited -2 Tk 19.29 billion, Summit Narayanganj Power Limited Tk 15.69 billion, Aggreko International Projects (85 MW) Tk 15.58 billion, Dutch- Bangla Power and Associates Limited Tk 15.30 billion, Acorn Infrastructure Services Limited Tk 14.84 billion and Aggreko International Projects (95 MW) Tk 14.39 billion, and Desh Energy Siddirganj Tk 13.91 billion and Max Power Tk 13.06 billion, the state minister for power, Mr Hamid, informed the parliament.
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