Capacity charge payment to power plants is nothing but robbery

According to a recent report from the Implementation Monitoring and Evaluation Division (IMED), the payment of capacity charges to power plants is being described as a form of robbery and reflects the presence of corrupt contracts. Over the past 14 years, the government has paid Tk 90,000 crore in capacity charges, and this amount is increasing every year.

The Bangladesh Power Development Board (PDB) has incurred a loss of Tk 154,190 crore in the last 12 years, and it is projected to have losses amounting to Tk 113,532 crore in the fiscal years 2021-22 and 2022-2023. The claim that investment in the power sector would cease without the capacity payment system is deemed false.

The report suggests that two conditions would be sufficient to attract investment — allowing private power producers to sell electricity at a higher rate (ranging from 25 to 50 per cent, depending on the location) and ensuring a minimum offtake of one-fourth or half of the electricity generated. Additionally, the report reveals that only 56 per cent of the total power generation capacity is currently being utilised.
The report highlights that the fund crisis in the power and energy sector will not be resolved until the government ceases the high payment for per unit electricity, capacity charges, fuel supply, and selling lands at low cost.

It also mentions the ease of obtaining bank loans, duty-free import opportunities, and the negative impact of the indemnity act of 2010 on the power sector. This act hinders accountability and allows certain power plants to exceed a per unit production cost of Tk 100. The report emphasises the need to immediately put an end to such misconduct.

Although there are separate agencies responsible for implementing power transmission and distribution infrastructure, a lack of coordination has resulted in some power plants remaining idle after completion due to the absence of transmission and distribution systems.

For years, political parties, experts, and citizens have been urging the discontinuation of capacity charges for quick rental plants, as it violates government procurement and other regulations. However, the report suggests that the government’s intention seems to be to exploit the citizens financially and favour a specific group, thereby undermining the potential for electricity generation and impeding progress.