Tk 8,730cr paid to 12 companies as capacity charge in FY21

The government in FY21 paid a total of Tk 8,730 crore to the top 12 companies as a capacity charge for supplying 6,551 MW of electricity. Summit Group topped the list followed by United Group, Bangla Trac, China National Machinery Import and Export Corporation (CMC) and Orion Group.

The Bangladesh Working Group on External Debt (BWGED) published the information on Thursday in a report titled “The Power Sector of Bangladesh-2021”.

The report said the sum paid as capacity charges to the 12 companies is 66.4 percent of the total capacity charge paid in that year.

On the other hand, the top 12 power plants, with an installed capacity of 4,763 MW, received Tk 65.02 billion as capacity charge in FY 2020-21 which is 49.4 percent of the total capacity charge.

In the same year, Bangladesh Power Development Board (BPDB) paid more than Tk 13,000 crore in capacity charge to 37 companies which were 21.2 percent higher than the previous year.

As a result, the report revealed, BPDB’s annual loss of FY21 amounted to Tk 11,000 crore — 54.5 percent higher than the previous year, according to the report.

A third of Bangladesh’s power generation capacity remains unused rendering private power plants a burden on the economy, the report said.

The cost of electricity will continue to rise and this will put additional pressure on Bangladesh’s economy if Bangladesh continues to spend billions to build new fossil fuel-based power plants, ‎the report warned.

‎‎The report further states that despite paying such a huge capacity charge, the government has approved 46 more power plants with a total capacity of 49,392 MW by 2030.

And, most of these are gas-based power plants, although Petrobangla is currently able to supply only 55.3 percent of the gas needed to produce electricity. ‎

According to the report, since the installed capacity is becoming much higher than the demand for electricity, a large number of power plants will be lying idle by 2025-2030, which will pull Bangladesh’s economy backwards. ‎

Ismail Ali, one of the authors of the report, said there is no standard in Bangladesh for setting up new power plants and setting up capacity charges for them.

“Capacity charge remains unchanged since 2012 when open tenders were floated for the construction of Bibiyana Power Plant. However, in the last decade, the cost of setting up power plants globally has fallen by about 50 percent,” he added.

BPDB is likely to incur a loss of over Tk 26,000 crore in 2020-2021 due to bad planning in setting up power plants and as a result, there is a possibility of a further increase in power prices at the consumer level. ‎

‎The BWGED report also issued a set of recommendations to mitigate the current electricity crisis in the country.

It said, shutting down unused power plants, adopting the “no electricity no pay” policy and stopping the construction of fossil fuel-based power plants are the right decisions for the new fiscal year.