Govt fund for private sector power plant raises questions

BANGLADESH Energy Regulatory Commission has decided to provide Tk 1,184 crore in equity to a joint venture company from Electricity Maintenance Fund of Power Development Board, as per a report in a local daily. The fund was created to help increase PDB’s capacity for low-cost power generation and maintenance of its power plants to reduce the overall power supply cost, said officials. The Commission has already given its consent to hand-over the money in equity for Bangladesh-China Power Company Limited.

In February 2011, the Commission created the fund with 5.17 percent of bulk power tariff for increasing PDB’s capacity in low-cost power generation as well as for proper maintenance of power plants. On March 27, the Commission issued a letter to the Secretary, Power Division givin its nod to provide the money after amending the guidelines for utilisation of the fund, said officials.

BCPCL, set up under a government policy to facilitate private entrepreneurs to sell bulk electricity from its power plants to the PDB, will use the fund for financial closure for its 1,320MW coal-fired power project, they said. The company is a 50/50 joint venture of North West Power Generation Company Limited – an enterprise of the Power Development Board and China National Machinery Import and Export Company.

The project cost has been estimated at Tk 19,840 crore with a debt equity ratio of 80:20. EXIM Bank of China will provide Tk 15,972 crore under a credit agreement. The 50 percent of the equity for each of the joint venture parties would pay Tk 1,984 crore.

The maintenance fund has so far accumulated about Tk 5,600 crore as the Power Development Board puts into the fund about Tk 1,000 crore a year; which increases with the increase in Power generation.

It is completely unacceptable that a private firm be given public funds to further profit from the public by selling electricity. It goes against the guidelines for setting up the fund in the first place – in fact the guidelines are being amended to suit the action of BERC, which in itself should raise questions of partiality.

Why should a private firm be given public funds when it will make profits from selling electricity to the same public by charging higher rates? Electricity rates are already at an all time high. Instead of using the funds to lower the cost of production or funding low cost methods, it is being used to facilitate a private company’s funding. Public funds can’t be used to satisfy the profiteering motive of private business. This is not acceptable and in our view the government must review the decision to protect public interest.