Private power producers urge govt to pay $1.5 bn in arrear to keep them afloat

Despite an improvement in payment the government still owes $1.5 billion to the private power plant operators for purchase of electricity, 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 the payment until February last. 

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

“Some of us received the highest 60 per cent 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.

Normally, the 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 the director of the Confidence Group, which owns a number of private plants.

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

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

The 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.     

The BPDB official data shows the country’s total generation capacity is 25,235 MW of which grid-connected generation is 22,348 MW up to April this year while the remaining 2887 is captive generation, mainly produced by industry owners, exclusively for running their own industries.

The country’s highest generation was recorded 14,782 MW on April 16 meaning that the surplus capacity is 10,453 MW (about 41 per cent). 

Of the 22,348 MW, some 50.3 per cent (11,240 MW) is being generated by public sector entities while the remaining 49.7 per cent (11,108) MW 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 per cent (8,807 MW) 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.