Originally posted in New Age on 13 March, 2023
Power giants at a business summit in the capital on Sunday urged the government to extend the scope of speedy supply of power as well as of the energy act, terming the existing power sector strategy very lucrative for investors at home and abroad.
Appreciating the government for its support to private investors such as their payment in foreign currency and rewarding the power sector investment with sovereign guarantee, the power giants called for more power sector incentives, even if it means increasing power sector expenses.
They also advised the government to increase gas and coal extraction to offset the impacts of the global energy crisis.
‘The special power act should be extended. The development of private sector is the development of Bangladesh,’ said Muhammed Aziz Khan, chairman, Summit Group, the power giant that, according to a study released in the past year, was paid by the government Tk 9,278 crore in capacity charge between 2010 and 2021.
Summit Group topped the list of 12 local and foreign power companies who pocketed over Tk 47,262 crore in capacity charge over the decade ending in 2021, according to a report released by Bangladesh Working Group on External Debt in March 2022.
The overall payment made as capacity charge over the decade was over Tk 76,115 crore.
Capacity charge refers to the payment a power company is entitled to whether or not it produces any power, ensuring profit on power investment regardless of whether it generates any electricity.
Aziz Khan was apparently referring to Quick Supply of Power and Energy Act, a controversial law that offers the government indemnity.
The act was the target of scathing criticisms by power and energy experts for they said that it paved the way for discriminatory power deals that eventually helped transfer public money to private pockets.
Bangladesh’s installed power generation capacity increased by more than five times, mostly through unsolicited bids, ever since the incumbent AL-government assumed power in 2009.
‘The expansion of power generation was possible for regulatory support such as the special power act,’ said Aziz Khan as he spoke as a panelist at a parallel session of the summit held at Bangabandhu International Conference Centre on the day.
He said that the national priority now should be to ensure energy security even if at an additional cost.
‘Other countries such as the neighbouring India gives even larger support to power sector,’ he said.
Bangladesh’s Power Development Board is weighed down by mounting financial burden as its losses reached Tk 76,115 crore over the decade since 2010-11.
The increasing financial burden necessitated frequent power price hikes. The power price had already increased three times since January this year.
The international investors became very interested in the power sector after the government strategy supported them so much, said Deepesh Nanda, chief executive officer, GE Gas Power South Asia, the South Asian office of the US-based General Electric Company, particularly after the government took the risk of supplying fuel and decided to pay bills in foreign currency after giving sovereign guarantee on the power sector investment.
Bangladesh is currently battling a dollar crisis, a part of which was blamed on high power sector expenses, particularly for importing fuel.
Major power projects have a debt obligation of $2 billion a year.
Ghulam Mohammed Alomgir, chairman, Max Group, said that whatever critics talked about his company taking away a massive amount of money, the truth was local power investors initially tackled Bangladesh’s power crisis by investing in quick rentals.
He said that he invested in quick rentals as soon as the government decided to tackle power crisis with the move.
Inadequate transmission and distribution capacity, however, undermined the gains in power capacity expansion, he said.
Max Group was ranked 10th by the BWGED for taking nearly Tk 1,705 crore between 2010 and 2021.
The panelists at the session also urged the government for continuing loan and tax incentives to private power producers.
Power and energy state minister Nasrul Hamid said that the power sector strategy was so successful that it attracted the world’s top investors such as Adani, Reliance, Sumitomo, and Mitsubishi, among others, to become power sector development partners.
‘The world’s top investors trusted the government and immediately invested billions,’ he said, adding, ‘The power sector strategy has been very successful.’
Former principal SDG coordinator Abul Kalam Azad said that Bangladesh should exploit its natural resources to offset the current global energy crisis.
The coal reserve Bangladesh has can last 70 years even if 25 per cent of the current reserve can be used at the current daily rate of coal consumption, said Abul Kalam.
He added that technologies such as ultra-critical technology reduced emission of pollutants significantly.
Moderated by BUET professor Ijaz Hossain, the session was also attended by power secretary Habibur Rahman, and International Chamber of Commerce president Mahbubur Rahman.