PDB incurring loss for buying power at higher rate

Anisul Islam Noor :The country’s power sector has become a loss project for paying higher bills to the rental power plant owners. The government is giving subsidy in importing fuel for rental and quick rental power plants and at the same time paying a very good amount for electricity purchasing.The state minister for power, energy and mineral resources, Nasrul Hamid Bipu, recently hinted that the authorities concerned would be increasing power prices for the next five years in phases, as low-cost plants were taking time to feed electricity to the national grid.Government dependence on expensive fuel oil-fired power plants for long periods has multiplied the average cost of power generation, which pushed retail prices up, said Zaid Bakht, Research Director of the Bangladesh Institute of Development Studies.Though power generation capacity of the country’s private sector has increased, the state owned low cost power plants are kept idle for lack of proper maintenance. A group of influential people, who are very close to the power ministry and Prime Minister’s energy adviser, have misguided the government, which increased power tariff 72 per cent in seven years, it is alleged by citizen rights group.The government is paying over Tk13,000 crore as subsidy and fuel subsidy, but benefit of the subsidy has been pocketed by the rental and quick rental power plant owners, they said. The power tariff was raised by 6.96 percent at the retail level to minimise revenue loss. Yet after this, the government may have to provide subsidy amounting to Tk 6,000 crore in the current fiscal. Power development Board (PDB) sources said, the total loss –retail and bulk power amounts about Tk 8000 crore in the current fiscal. Of this, the loss in retail power sale, which is known as distribution was about Tk 2000 crore while remaining Tk 6000 crore loss, is in bulk power sale or in the generation section. This time, all the five distribution companies appealed to the Bangladesh Energy Regulatory Commission (BERC) seeking tariff hike at different rates considering their own position. Among the five distribution companies, the Power Development Board (PDB) sought 15.50 percent hike while DPDC 23.50 percent, Desco 15.90 percent, REB 12.58 percent and WZPDC 8.59 percent hike.  Sources said, the PDB, which is only responsible for power generation, also has distribution still it holds 25-27 percent of the total power distribution business.  However, in the power distribution business, Rural Electrification Board (REB) has been the largest entity holding 35 percent market share, while Dhaka Power Distribution Company (DPDC) 19-20 percent, Dhaka Electric Supply Company (Desco) 12 percent, and West Zone Power Distribution Company (WZPDC) 5 percent of the business.  PDB officials said, after the new hike in retail tariff, the organisation would get Tk 175 crore for the next three months of the fiscal year 2013-14 to cover its annual retail business loss of more than Tk 500 crore. “But, the latest tariff hike will not play any role in offsetting the loss in bulk power sale,” PDB Chief Engineer (system planning) Mizanur Rahman said.Officials said the PDB has to incur its main loss in buying electricity of about 2,200 MW from rental and quick rental power plants whose average production cost is about Tk 18 per unit. But, the PDB has to sell electricity to distribution companies at on average Tk 6 per unit incurring a loss of Tk 12 per unit.  Desco Director Shah Alam said, his organisation would earn Tk 175 crore after the latest tariff hike. “But despite the hike, still it may have to incur a huge loss for the next 9 months,” he said.  PDB official said, the current fall in the government’s revenue income by Tk 12,000 crore might put a pressure on the organisation to further move for raising bulk power tariff in near future. “Because, under the current situation, there might be an uncertainty in getting a major subsidy of Tk 6000 crore for power sector,” the PDB said.