Govt paid Tk1.04 lakh crore capacity charge to IPP, rental power plants

Staff Reporter :
The Awami League government in its three terms has so far paid a total of Tk1,04,926.81 crore to 82 independent power producer (IPP) power plants and 32 rental power plants as capacity charge and rental payments, the State Minister for Power, Energy and Mineral Resources Nasrul Hamid said yesterday.

He made this comment while replying to a query from Gonoforum MP Mokabbir Khan during the question and answer session of the Jatiya Sangsad on Tuesday.

In a scripted answer, the junior minister said among the 82 IPP power plants, Bangladesh-China Power Company Plant was paid the highest Tk7,455 crore. And among the 32 rental power plants, Aggreko International Projects was paid the highest Tk 2,341 crore in last 14 years.

The state minister placed a list of the names of 82 IPP power plants and 32 rental power plants and the amount of money paid to them. Nasrul also mentioned the significant terms of the agreements executed with the power plants, against which the capacity charge has been paid. They are:
1. Annual availability should be 90 percent. Less than this is deducted from the capacity payment.

2. Dependable Capacity Test to be performed annually.

3. Operation security has to be provided while operating the power plant.

4. Insurance covering risks for operation of power plant should be confirmed.

5. License has to be renewed every year through Bangladesh Energy Regulatory Commission.

6. Environmental clearance should be obtained.

7. Electricity has to be supplied according to the demand of NLDC (National Load Dispatch Centre) of the Power Grid Company of Bangladesh.

8. Timely maintenance of power plants should be done.

9. The power plants should be operated according to Prudent Electrical Practice and Prudent Electric Utility Practice.

Meanwhile, according to a July report by the Implementation, Monitoring and Evaluation Division (IMED), a total of Tk90,000 crore was paid as capacity charges to private power plants over the past 14 years, all of which had to be in dollars.

The power sector in the country was experiencing substantial financial losses, creating a significant subsidy burden on the government because of the model of capacity charge and the indemnity law among other worrisome ailments, the report observed.

It recommended a number of steps to mitigate the situation, including ending capacity charges, closing down energy-unfriendly captive power plants and scrapping the Speedy Supply of Power and Energy (Special Provisions) Act 2010.