Fund crunch disrupts electricity supply

A worker climbs an under-construction power transmission tower in Munshiganj, outskirts of Dhaka, Bangladesh, on 30 June 2021
Reuters file photo

The required amount of electricity cannot be generated and supplied resulting in load shedding in a large part of the country outside Dhaka regularly.

As Bangladesh Power Development Board is unable to clear dues of most of the power plants, they (power plants) cannot purchase adequate fuel due to fund crunch. As a result, these power plants are unable to generate electricity.

The country has a capacity to generate more than 24,000mw of electricity against a demand of 14000-16000mw of electricity.

But the powerplants are unable to generate 14000-16000mw of electricity.

Besides, mismanagement and waste is rampant.

As per agreements, Bangladesh Power Development Board purchases the electricity of all power plants and then sells it to power distribution company at a bulk price, which has been increased twice over the past year.

Yet, the government provides subsidies to meet the deficit in power sector. According to the Power Division sources, the finance ministry owes Tk 280 billion to the BPDB till April.

As the allocation of subsidy is not disbursed regularly, the BPDB owes Tk 250 billion to the power plants.

In the meantime, the BPDB demands Tk 50-60 billion from the finance division every month.

Last month, the finance division gave the BPDB Tk 12 billion only. The Power Division and the BPDB held a meeting with the finance ministry on Tuesday. At the meeting, a commitment was made to release Tk 25 billion this month, which may happen in the first week of August. However, the finance division is urging to reduce power production cost regularly.

Two reliable officials of the Power Division said import has long been reduced to save US dollars. Revenue of the government also dropped, so, the finance division cannot provide taka as per the demand even if the agency wants to do so. Besides, with the election approaches, there is no option to raise power tariff again, and that is why the BPDB will not be able to pay the dues of the power plants soon.

State minister for power, energy and mineral resources Nasrul Hamid told Prothom Alo it is possible to generate 17,000 mw of electricity with the existing capacity, but it has not been possible for various reasons. Bill of various power plants remains unpaid, but subsidies has been allocated in the budget, and the finance ministry is disbursing it in phases. Meanwhile, large power plants are going on operation one after another, and this will also reduce production costs, he added.

More load shedding in rural area

The Power Grid Company of Bangladesh (PGCB) is the lone state-owned agency for transmitting power from power plants to the national grid. According to the PGCB, there were more than 1,500mw of load shedding per hour on Tuesday, and that decreased as demand of electricity fell due to rainfall at night. However, there was no power outage in Dhaka.

Prothom Alo correspondents from various districts said load shedding occurred for several hours and power outage hit more rural areas than town. The Mymensingh Palli Bidyut Samity-3 said there was a 50 per cent of supply deficit in electricity from 12:00am on Monday to Tuesday 12:00pm, and power outage has continued for over a year in this area. Load shedding was 24.13 per cent in Gazipur.

The Northern Electricity Supply Company Limited (NESCO) supplies electricity in Bogura town. NESCO’s operation and maintenance circle (Bogura) superintending engineer (in-charge) Md Hasibur Rahman said the daily deficit of electricity is 70mw. On the flip side, Bogura Palli Bidyut Samity-2 general manager Amzad Hossain said load shedding is 30 and 40 per at day and night.

Capacity charges being given even power plants not in operation

According to the BPDB officials, the number of power plants has increased to 153 from 27 over the past one and a half decades. Electricity even reached isolated char and remote hill areas and cent per cent electrification has been celebrated by the government. But, power generation falls short of the demand despite the production capacity.

One of the reasons is a major portion of the power plants are not in operation due to technical issues while a third of the power stations faces crisis of gas, coal and fuel. Of these power plants, many shut down completely and some plants are being operated partially.

Forty seven per cent of total power production capacity depends on gas, but a shortage of gas supply occurs regularly. Of the gas-fired power plants, about 6,500mw is being generated against the daily capacity of 11,000mw.

There are 65 furnace oil-based power plants with a capacity of a little more of 6,000mw. Of them, 25-28 power plants are not producing power regularly due to a shortage of fuel oil. As a result, on average, 3,500mw of electricity are being produced by fuel oil-based power plants.

A power station is paid capacity charge whether it produces electricity or not. Capacity charge is likely to exceed Tk 250 billion in 2022-23 fiscal, which is yet to be finalised. The BPDB paid about Tk 230 billion in capacity charge in 2021-22 fiscal.

Pressure of unpaid bills on power plants

Private sector has more than the half of the country’s power production capacity. The BPDB needs to pay on average Tk 35 billion in electricity bill. As of April, there were unpaid electricity bills of Tk 180 billion in private sector.

Three more months have passed since then and pressure of unpaid bills is rising. Many private power plants kept their plants closed due to the shortage of taka and some of them are not even agreeing to BPDB’s request to go on operation.

The first unit of the Adani Power Plant in the Indian state of Jharkhand started supplying electricity to the national grid of Bangladesh in March this year. The second unit of the Adani plant received approval for commercial operation at the end of July, although they are still supplying electricity from the first unit only. Recently, the government paid the Adani 17 million US dollars in electricity bill for March and, after three months, the Adani now will get about 300 million US dollar.

No benefit from raising tariff

Power tariff has increased 11 times at bulk level and 13 times at retail level over the past 14 years. The BPDB sells electricity at Tk 6.70 a unit at bulk level, but their production cost is about Tk 10 a unit. Production cost rose to Tk 11 a unit once, but it dropped following the fall of the global coal price.

There is an opportunity to reduce cost by raising power production from coal. The Rampal power plant in Bagerhat is about to be shut. The Adani plant is yet to supply electricity at its full capacity. Again, gas price was raised by 141 per cent in last January, resulting in increase of production cost of gas-based power plant. Diesel-run power plants have started operation as furnace oil-based power plants remain closed because of dues.

Experts said mismanagement and plan for creating more capacity than demand are responsible for this crisis. Diesel-run power plants, which are most expensive, were scheduled to be closed in last June, but these plants are still in operation in a bid to meet the power demand.

According to the BPDB sources, production cost stands at Tk 27 per unit electricity from 500 mw of two private diesel-run power plants and Tk 27 per unit electricity form two state-owned diesel-run power plants. The BPDB has been compelled to operate these plants, further increasing its burden of loss.

The Power Division said fuel supply has been a big challenge to power production over the last year. There is a necessity of 1.25 billion US dollar in power and energy sector. Dollar crisis also disrupted import of coal, liquefied natural gas (LNG) and fuel oil, as well as payment to foreign power plants.

However, the Bangladesh Bank has started releasing US dollars recently at the instruction of the government’s high-ups. This has somewhat eased the shortage of dollars, but liquidity crisis is not going away. Challenge still exists to ensure uninterrupted power supply.

Power sector expert and consumers’ right body Consumers Association of Bangladesh (CAB) senior vice president M Shamsul Alam told Prothom Alo development of power sector happened following no rules and regulations.

Cost has been increased by offering more profit to private sector through deals. Power tariff has been increased repeatedly and customers bear the burnt. Yet, the PBDB cannot meet the power deficit and they are doing load shedding regularly, which has become a major blow to the economy, he added.

*This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna