Owners of private power generation plants owe the government a little over two billion dollars for electricity prices. In local currency that is about 23 thousand crore rupees. Bangladesh Power Development Board (BPDB) is unable to pay this amount mainly due to the ongoing dollar crisis, increasing losses and non-receipt of subsidy money on time. On the other hand, the sector is also in crisis due to the recent drop in the value of rupees against the dollar as it is dependent on imports of fuel and parts for power plants.
Bangladesh Independent Power Producers Association (BIPPA), an organization of private entrepreneurs in the power sector, wants to meet Prime Minister Sheikh Hasina to decide what to do to overcome this crisis. Recently, BIPPA said in a letter seeking a meeting with the Prime Minister, the entrepreneurs of this sector are on the verge of bankruptcy in the current situation. The Prime Minister’s intervention is necessary to survive.
When asked, BIPPA president Faisal Khan told Samakal that some power plants have received bills till last January. And now some institutions are getting March bills. However, according to the agreement with the Power Development Board, the power plants have an obligation to clear the dues within one month of submitting the bill. But now in many cases even seven months of arrears remain. In total, private power plants owe about 2.7 billion dollars. The due amount is increasing every month.
He also said that the PDB is taking the dollar exchange rate at Tk 111 while paying the dues. But banks are asking for 125 rupees per dollar to open LC for power plant fuel import. As power plants depend on imports of fuel and parts, the private power industry will not survive if there is a dollar price differential. So they have sought the Prime Minister’s intervention in this matter. In a letter written to the Prime Minister on November 5, BIPPA said that BPDB has been extremely late in paying bills to private sector power plants in recent times. This sector is losing the efficiency and stability of power generation. This problem needs to be solved quickly for the sake of the country’s economy as a whole.
It is also said that due to late payment of bills and high interest rate of capital loans, the entrepreneurs of this sector have suffered severe losses. At the same time, the state of bankruptcy has been created due to the massive depreciation of the rupee against the dollar.
Regarding the delay in the payment of bills, several officials of BPDB told Samakal that according to the contract, the dues of the private power plants have to be paid in dollars. But due to the ongoing dollar crisis, they are basically unable to pay their dues.
They also said that due to the increase in the price of energy in the international market and devaluation of the currency, the cost of power generation has increased a lot in recent times. Therefore, BPDB has been incurring excessive losses in recent years by selling electricity to consumers at a relatively low price by buying it at a higher price from private companies and producing at an increased cost. On the contrary, money for subsidy is not available from the Ministry of Finance on time. All in all, BPDB is currently in financial crisis.
BPDB losses and subsidies
According to BPDB sources, the company has recorded a loss of Tk 52 thousand 345 crore in eight years from 2012-13 to 2019-20 financial year. And for the financial year 2022-23, the loss of the organization stands at (temporarily) 51 thousand 526 crores. In other words, in one year BPDB’s losses are close to eight years. Even compared to the financial year 2020-21, the losses in the last financial year 2021-22 have increased almost four and a half times.
In the last fiscal year 2022-23, the initial estimate of BPDB has estimated the loss at 35 to 36 thousand crores. Against this, the Ministry of Finance has allocated a subsidy of Tk 23 thousand crores. But in the end the loss increased to 51 thousand 526 crores. It also increases the demand for subsidies. The situation has reached such a level that it is not possible to meet the liability with the amount of subsidy allocated for electricity in the budget for the last few fiscal years. Taking these into consideration, an allocation of 36 thousand crore rupees has been kept in this sector in the budget of the current financial year 2023-24 for the purpose of meeting the liabilities of the previous financial year.
But officials of the Ministry of Finance told Samakal that due to the shortage of money in the government treasury, 5 thousand crore rupees were deducted from the allocation till last October, which made it possible to give electricity subsidy till October last year. Still about one year’s subsidy remains outstanding. Meanwhile, the demand for subsidy received from BPDB till last June requires at least 25 thousand crore rupees. That is, with the allocation of the current financial year, the demand of the maximum two months of this financial year will be met in addition to the arrears. If the allocation for this sector is not increased in the revised budget, the liability of at least 10 months of this financial year will be imposed in the next budget.
Tags: billion dollars owed government
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