Scrap 2010 special act for power sector

Energy experts, economists and BPDB officers urge new adviser

FE Team | Published: August 17, 2024 23:32:42

Energy experts, economists and officials of Bangladesh Power Development Board (BPDB) want scrapping of Speedy Supply of Power and Energy Special Act 2010, renegotiation with private plant operators to reset the power tariff and reducing the capacity charges to help survive the country's power sector.
They made the suggestions just before assuming office of the Power, Energy and Mineral Resources Ministry by the newly appointed advisor of the interim government, reports UNB.
Former power secretary Muhammad Fouzul Kabir Khan has been appointed as advisor of the interim government with responsibility of the Ministry of Power, Energy and Mineral Resources, Ministry of Road Transport and Bridges and the Ministry of Railway.
The suggestions of the experts came against the backdrop of the critical juncture of the country's power sector where the BPDB has been incurring a loss of over Tk 450 billion annually in buying electricity at higher cost while its pending outstanding bills with private companies is Tk 450 billion.
It also has an annual burden of a whopping Tk 371 billion in capacity charge payments under the contracts with private power producers.
Centre for Policy Dialogue's research director and economist Dr Khondaker Golam Moazzem said the interim government should first focus on bringing a major reform in the country's power and energy sector.
"As part of the reform, it has to scrap first the Speedy Supply of Power and Energy Special Act 2010 to remove all discrimination and ensure transparency and competition in the procurement process," Dr Moazzem said.
He said the next step should be renegotiation with the private power producers to re-fix their tariffs, especially with those companies where the government has long term power purchase agreements and has passed a critical minimum period.
The third step, the CPD director said, should be cancellation of the letter of intents (LOI) with those companies which were selected on an unsolicited basis to sign contracts for power purchase.
Echoing the idea of reforms in the power and energy sector Dr M Shamsul Alam, senior vice president of Consumers Association of Bangladesh (CAB), and also energy expert, said the government has to reconstitute the Bangladesh Energy Regulatory Commission (BERC) and return the tariff fixing authority to it.
Side by side, the government entities in the power and energy sector also should be restructured to bring good leadership, he said.
He also said that the government should not take any move to increase the power and energy prices and immediately sit with the stakeholders in the sector to get their suggestions.
The BPDB officials are also negotiating with the private power companies on reducing power tariff and capacity charges.
If the capacity charge is renegotiated and brought down to 50 per cent, the government can save Tk 180-200 billion annually, said one top official, based on the amount paid last year.
They also said annulment of the existing Speedy Supply of Power and Energy Special Act 2010 will bring accountability and transparency in the power sector.