Pvt power plants urge govt to pay $1.5bn arrears

Despite an improvement in payment, the government still owes $1.5 billion to private power plant operators, according to official sources. 

The sources confirmed this week that the state-owned Bangladesh Power Development Board (BPDB), the single buyer on behalf of the government, partially cleared payments until February last.

"We have not received any payment against the electricity purchase bills – from March till the current month," said Imran Karim, president of Bangladesh Independent Power Producers Association (BIPPA), the representative body of private power producers in the country.

"Some of us received highest 60 percent of the payments against the bills of February while many have not," he told UNB.

He hoped that there would be a major breakthrough in the bill settlements soon as their persuasion continued at the highest policy making level.

Usually, BPDB purchases electricity worth Tk 4,000 crore per month.

Now, the payments against the bills of four months — March, April, May and June — are pending to be cleared. In addition, some partial bills of February have also not been cleared.

By this calculation, the total amount of the pending bills will be over $1.5 billion, said Imran, also director of the Confidence Group, which owns a number of private power plants.

BPDB has been in a cash crunch for the last several months which forced the organisation to move a proposal to the energy regulator to raise the electricity price at retail level.

Bangladesh Energy Regulatory Commission (BERC) is yet to make any decision though it recently held a public hearing on the issue.

BPDB, however, disagreed with the calculation saying that it normally gets 45 days to clear a bill after submission. 

"If the due payment is calculated this way, the amount will be equivalent for 2 and a half months", said Saiful Hasan Chowdhury, director, public relation of the BPDB.

He said BPDB has cleared most of the payments against the bills of February.    

BPDB official data shows the country's total generation capacity is 25,235MW of which grid-connected generation is 22,348MW up to April this year while the remaining 2,887 is captive generation, mainly produced by industry owners, exclusively for running their own industries.

The country's highest power generation was recorded 14,782MW on April 16 – meaning that the surplus capacity is 10,453MW (about 41 percent).

Of the 22,348 MW, some 50.3 percent (11,240MW) is being generated by public sector entities while the remaining 49.7 percent (11,108MW) is coming from the private sector. 

The BPDB documents reveal the government has to spend a total of Tk 71,878 crore in the FY2021-22 for total power production, of which Tk 44,434 crore will be spent for purchasing electricity from the private sector.

Of this amount, Tk 37,963 crore will be required to purchase electricity from the independent power producer (IPP) and small IPP plants in the private sector which produce 38 percent (8,807MW) of the total generation.       

BIPPA officials said the delay in payment is not the only problem that the private power producers are facing.

"The shooting trend in dollar price, unavailability of the green backs with banks and counting penalties for delayed payment to foreign lenders and equipment suppliers have been the major problems," said BIPPA president.

He noted that some of the letters of credits (LCs) were opened with the banks a few months back, calculating the US dollar at a lower rate like Tk 86.

"But after a huge spiral in dollar rates, we have to now calculate the dollar rate at over Tk 95" in settlements of the LCs, he said, adding that some banks do not even sell dollars at the government's fixed rates.

He also mentioned that many foreign banks charge IPP operators for delay in their repayments while equipment suppliers are also doing the same practice.