Owners of private power plants have urged the government to clear outstanding payments in order to enable the opening of letters of credit (LCs) for fuel imports and thereby avoid electricity load shedding.
They said the interim government initially issued bonds worth Tk 5,000 crore (50 billion) to settle arrears and subsequently paid bills regularly. As a result, there was no load shedding during last year’s summer season.
They added that the new government could also provide either funds or bonds to settle the dues.
Leaders of the Bangladesh Independent Power Producers Association (BIPPA), the organisation representing private power plant owners, made these remarks at a press conference held at a hotel in the capital on Monday.
The press conference focused on the current situation in the power and energy sector.
They stated that even if the government issued bonds, power plants could adjust their bank loans accordingly.
In their written statement, the association’s leaders said that under existing contracts, power plant bills should not remain unpaid for more than 30 days.
However, payments are now delayed for 180 to 270 days. This situation makes it difficult to maintain electricity generation by purchasing fuel oil.
With arrears amounting to Tk 14,000 crore (140 billion), banks cannot open LCs for fuel oil imports.
However, they noted that if the outstanding payments are cleared, it would be possible to import fuel oil even during wartime conditions.
BIPPA also said that although the country’s electricity generation capacity exceeds 28,000 megawatts, it is not always possible to produce electricity at full capacity.
Due to insufficient gas supply, more than 6,000 megawatts of capacity cannot be utilised. In addition, 1,626 megawatts remain shut down for maintenance.
Solar power is unavailable at night, while diesel-based power plants often remain closed because of their high operating costs.
Consequently, the effective generation capacity during peak demand stands at 18,627 megawatts, making it difficult to manage the upcoming summer season.
The written statement further noted that over the past six years, fuel costs for electricity generation have increased by 95 per cent. However, electricity tariffs have not risen proportionately.
During the same period, operational costs for power plants have increased by 55 per cent. Meanwhile, 70 per cent of electricity is consumed in residential, commercial and agricultural sectors outside industry.
Electricity prices for the largest consumers have increased by 54 per cent. Therefore, the more electricity the government generates, the higher the subsidy burden it must bear.
Power plant owners also demanded the temporary withdrawal of 34 per cent duty on fuel oil and 22 per cent duty on liquefied natural gas (LNG) imports.
They said this measure would reduce the cost of electricity generation. After the start of the Russia–Ukraine war, LNG prices rose sharply in the global market, prompting the government to suspend spot-market LNG imports for seven consecutive months.
During that period, oil-fired power plants produced electricity at lower cost. They noted that LNG prices are rising again and argued that electricity generation should rely on whichever fuel offers the lowest cost.
In the written statement, BIPPA’s former president Imran Karim said, “Oil-based power plants play a major role in electricity generation. If these plants shut down, it will be difficult to manage the electricity supply situation. The amount of oil currently in stock will allow oil-based power plants to continue production until 7 to 10 April. However, this will not apply equally to all plants, and some will run out of oil earlier.”
Speaking at the press conference, BIPPA president KM Rezaul Hasnat said, “Due to the gas shortage, 23 per cent of power plants cannot operate. This is creating a severe crisis. There is no opportunity to increase gas supply even if we want to. We also lack the infrastructure capacity to increase imports. Therefore, the government should consider the entire matter with due importance.”