Staff Reporter :
The government is providing on an average Tk 200 crore as subsidies every month for purchasing electricity from the Independent Power Producers (IPPs).
According to primary estimates, the government will need more than Tk 2,000 crore as subsidies in the current fiscal for purchasing electricity from private power plants.
But the looming apprehension is that the subsidies may be increased if the oil and gas price in the world market keeps going uptrend.
The Finance Ministry has already fallen in the pit of apprehension for the additional expanse from the revenue to purchase electricity from IPPs.
Concerned authorities said this amount of subsidies is no less than Tk 2,000 crore in the current year and it will go up in the upcoming days.
In addition, there are a number of IPPs in the pipeline of commissioning. While, the cost of fuels used for generating electricity is also in the upward trend.
The Power Division has already submitted a demand for Tk 4,000 crore as IPPs subsidies for the months of September and October. But the Finance Ministry has not released the funds yet, sources said.
At present, there are 78 IPPs in the country with the total capacity of 8,777 MW, which is more than one-third of the total capacity to generate electricity.
Besides, under the IPPs, electricity plans with the capacity of 3,000 MW are in the pipeline to start generation.
Earlier this year, Power Division Board (PDB) unveiled the information of the commissioning of such power plants.
Of these plants, the SS Power Limited in Banshkhali of Chattogram is being considered as the biggest power plant under the private initiatives and it will begin its first unit in July while the second unit in August.
On the other hand, Summit Group is constructing the Summit Meghnaghat-2 power plant in Narayanganj with the capacity of 583MW, which is expected to be commissioned in August this year.
Unit Group has ventured to set up another power plant with a capacity of 584MW with a deadline to start it in November this year.
In addition, there are under construction power plants in Chandpur, Thakurgaon and Barishal with a capacity of 115MW, 115MW and 307MW respectively. PDB has already commissioned those power plants. Operation will begin soon.
The amount of subsidies will increase when these power plants will begin generations, sources said.
The PDB will need $ 200 million as subsidies in the current fiscal for buying eletrcity from IPPs and it is more than 71 percent compared with the previous year, Institute for Energy Economics and Financial Analysis (IEEFA) report said.
The government allocated Tk 9,000 crore as subsidies in the budget but PDB is now demanding additional Tk 3,000 crore to meet its need.
The Finance Division has already released Tk 8,700 crore for six months from March 2021 to August 2022.
The budget allocation cannot meet the growing demand of PDB. The current subsidies will sustain till October. After it, PDB has to wait for the next budget allocation.
Sources said that PDB spent Tk 49,439 crore for electricity in 2020-21 fiscal. Of the total amount, the IPPs electricity cost was Tk 27,737 crore.
It means the government spends 56 percent of its allocation for IPPs electricity. However, in the 2019-2020 fiscal, PDB spent Tk 17,519 crore for IPPs electricity, which was 20 percent of the total expenditure.
In the last fiscal, PDB had a loss of Tk 11,000 crore for IPPs electricity. It is feared the loss will be double this year because of the increasing price hike of oil and gas in world market.
To cut the loss in electricity sector, the government earlier decided not to renew the agreement with the old and rented power plants.
But the government has turned back from those plans and has renewed the agreement with five plants.
Experts said the state-owned power plants should be run as the power generation cost is low. It will help reduce the cost of IPPs electricity.
Power Division Secretary Habibur Rahman has said that the power generation cost has gone up due to price hike of fuel after pandemic and ongoing Russia-Ukraine war. So the subsidies have increased, he said.
“The electricity price has to be increased if we want to cut the subsidies. Bangladesh Energy Regulatory Commission is working on it. The government is working what can be done to cut the subsidies,” he added.
