Rental power co faces $23m fine

Local rental power company Desh Energy is facing a staggering fine of $23.89 million or Tk 186 crore for underperforming and using excessive fuel for its 100 megawatt diesel-fired power plant in Siddhirganj in the last four years.

The company is owned by business leader Annisul Huq, who has recently been reportedly backed by the Awami League for mayor of Dhaka North City Corporation.

The Power Development Board (PDB) found that the plant was consuming excessive fuel since its commissioning in February 2011 as it was run on poor quality machinery.

For instance, the Siddhirganj plant used up 1.28 lakh litres of extra fuel worth $1 lakh in November last year. The firm's total outstanding bill for using extra fuel stood at $21.8 million till December last year.

But Desh refrained from paying the fine to the PDB claiming that it needed extra fuel to generate each megawatts of power as the diesel supplied by Bangladesh Petroleum Corporation was substandard. The company got a court injunction preventing the PDB from deducting the fine from its monthly payment voucher.

Desh started supplying power to the national grid in February 2011 under a three-year contract with the PDB. The contract expired last year.

The company in December 2013 entered a five-year amendment contract with the PDB. The firm had withdrawn the injunction through a court before the amendment contract was inked.

However, as the PDB within a few months decided to realise all its dues in 36 monthly instalments from Desh's payment vouchers, the company again moved the court with an arbitration case and obtained an injunction that expired last week. The case is still pending with the court.

Desh is charging Tk 19.53 for each kilowatt hour of power.

Talking to The Daily Star, a spokesman of Desh Energy said: “We shall clear all the dues…. The reality is that the government had formed a committee to investigate our complaint. They found fault with the fuel after testing it at the Eastern Refinery. Once the fuel issue is settled, we would instantly pay the dues.”

He claimed that the plant faced excessive outages as some 96 of its machineries were damaged in a lightning within three days of its commissioning. “This was unfortunate and we don't dispute their [PDB's] claim. We've paid liquidated damages.”

To improve the plant's performance, Desh Energy is installing a new generator adding 60 mw power by June.

“This over-capacity is to avoid LD. Besides, the government would need more power,” said the Desh spokesman.

Two other rental power companies, Energis and Precision Energy, also consumed excessive fuel due to the same reason and are facing fines. They also got court injunctions to avoid paying fines, but later withdrew the injunctions through courts as their contracts have been renewed with the promise that the government would resolve the disputes.