Ordinance issued cancelling quick energy supply act: Govt ends IPP era, shifts to Merchant Power Policy
Staff Reporter :
The government has decided not to establish any more Independent Power Producer (IPP) plants in the private sector.
Instead, future private sector power plants must adhere to the Merchant Power Plant Policy (MPPP), under which the government will purchase a maximum of 10-20 per cent of the electricity produced.
Power and Energy Adviser, Dr Fouzul Kabir Khan, made these remarks while addressing a seminar titled “Rapid Transition to Renewables: Role of Domestic Financial Institutions”, organised by the Economic Reporters Forum (ERF) at its auditorium on Saturday.
Dr Khan explained that under the current policy, the government guarantees the purchase of all electricity generated by IPP plants.
However, under the new policy, private producers will need to sell electricity to their own buyers via the government grid system, paying a wheeling charge for the service.
Reflecting on past practices, Dr Khan criticised the financing of certain projects during the previous Awami League regime, highlighting that loans were often granted based on personal connections rather than the financial assets of investors.
He noted that defaulting loans had exposed empty balance sheets in companies such as S Alam and Beximco.
Emphasising the importance of renewable energy (RE), Dr Khan highlighted its necessity for the country’s export-oriented garment sector.
He dismissed the notion that a lack of available land is a major obstacle to the promotion of solar power projects, pointing out that many government departments possess vast unused land that could be utilised for solar power development.
Dr Khan also opposed tax exemptions on imported solar power components like inverters, panels, and structures, advocating for local production akin to practices in India.
He encouraged business leaders to invest in various sectors, including power and energy, on the basis of fair competition.
Centre for Policy Dialogue’s Research Director, Dr Khondaker Golam Moazzem, addressed the challenges faced by local banks in financing long-term renewable energy projects, citing the risks associated with the mismatch between short-term deposits and long-term investments.
He mentioned that the central bank had taken initiatives to mitigate these risks.
Meanwhile, an ordinance has been issued to repeal the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010.
Following approval by the Advisory Council, the President promulgated the ‘Quick Enhancement of Electricity and Energy (Special Provisions) (Repeal) Ordinance, 2024’ on Thursday.
Although the law has been repealed, contracts and actions taken under it prior to the repeal will remain valid.
The government retains the authority to review such activities in the public interest and take necessary actions as appropriate.
Earlier, on 14 November, the High Court declared the immunity provision in Section 9 of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 as “illegal and unconstitutional.”