One of the Awami League cronies, who made it to the recently published White Paper on economy for raking in abnormal profit, continues to do so with its business monopoly as an independent power producer, while paying less for years for the gas it uses in its plants.
The United Power Generation and Distribution Company Limited that owns two commercial independent power plants, which are the only power plants of this kind in the country, has refused to pay for years the legitimate price for the gas it uses for power generation.
Years of paying less since January 2018 has led to the piling up of the company’s dues to the state-owned Titas Gas Transmission and Distribution Company Ltd to Tk 486 crore by October 2024, eight months after the Appellate Division had ruled against it holding back the payment.
The company commercially producing power was not supposed to receive the gas in the first place, considering the 2008 policy to enhance private sector participation in the power sector, amidst rapidly depleting gas reserve and staggering energy crisis.
The story of how the company, which fetched, almost without failing, 50–74 per cent annual profits over the last decade, used the scarce national resource for commercial purpose is a telltale sign of Awami League’s brazen favouritism, according to energy experts.
The United Power that purchased gas for Tk 988 crore between 2017–18 and 2023–24, earned Tk 3,799 crore from electricity sale.
‘The United has refused to pay legitimate price for rather a long time. Its gas supply should be disconnected,’ said Shahnewaz Parvez, managing director, Titas.
But business monopoly stood in the way, he said, reminding that the United Power was the only company supplying electricity in the Dhaka and Chattogram export processing zones. The power plants, with installed capacity of 164MW, were established with Bangladesh Export Processing Zone Authority’s approval in 2008 and 2009, just around the time Awami League assumed power. The two plants’ establishment cost was over Tk 1,005 crore.
Energy experts explain that a commercial power plant is essentially different from other power producers such as independent power producers, given that the government takes no risk and responsibility for the commercial one, leaving its construction and business to be operated on its own. Independent power producers, also known as IPPs, on the other hand, enjoy privileges from government, such as, guaranteed fuel supply and electricity sale. The government buys electricity from all the IPPs in the country.
The ‘Policy guidelines for enhancement of private participation in the power sector, 2008’ states that commercial power plants’ investors will have to arrange their own fuel and energy.
The policy, however, also allows commercial power plants to obtain licence as an independent power producer. But such a licence, known as COIPP, combining two types of power plants, was awarded only to one company: United Power.
The White Paper released by the interim government cites United Power as a member of Awami League’s favoured groups that received special terms. The company receives gas at the IPP rate of Tk 15.75 per meter cube instead of the captive rate of Tk 30.75 per meter cube, the paper says.
‘…selling power at the commercial rate to the Dhaka and Chittagong EPZ, thus raking in abnormal profit,’ reads a line of the White Paper.
A year before the United Power obtained the licence in October 2009, it had signed a deal with the Titas for purchasing gas at the captive rate for its Dhaka EPZ power plant.
The captive rate for purchasing gas, applicable to captive and commercial power plants, has always been higher than the IPP rate. In 2009, the difference in gas prices for the IPP and captive was Tk 1.12 per unit, which is Tk 15 at the moment.
The United Power started paying the IPP rate after obtaining the licence and continued to do so until August, 2022, when the High Court ruled that the company must pay separate rates—the captive rate for electricity sold commercially and the IPP rate for electricity sold to the government.
The High Court order came following a legal battle triggered by Titas asking for separate rates in 2019.
The United Power’s outstanding bills resulting from paying less stood at Tk 377 crore in 2022 when the High Court ordered in favour of the Titas to charge separate rates. In December 2022, the United Power agreed to pay back the dues in 40 instalments, only one of which—Tk 30 crore—has so far been paid.
But after the company had started paying the separate rates from August 2022, it stopped paying higher heating value which is obligatory under the contract when the supplied fuel produces heat higher than contracted. Fuels with higher heating value yields more production.
The United Power had tried to have the High Court order reviewed by the Appellate Division, but its petition was discharged in February this year.
Still, the company did not clear its dues.
‘The bill the company paid was barely half of what it had owed,’ said Hasan Mehedi, member secretary of Bangladesh Working Group on Ecology and Development, analysing data obtained from the Titas.
How much the United Power owed to the Karnaphuli Gas Distribution Company Limited is unknown.
The working group’s analysis also revealed that 23 per cent of the power produced between 2017–18 and 2023–24 was supplied to the national grid, while the rest went as a commercial supply to the Bangladesh Export Processing Zones Authority.
Last year, the United Power declared 20 per cent profit. Its profit stood at 74 per cent in 2018, followed by similar profits made in 2016 and 2017. In the other years, since 2013, the company reported 50 per cent or more profit.
Neither the Bangladesh Power Development Board nor Titas or Bangladesh Energy Regulatory Commission officials have any idea about the rates at which the United Power sells power commercially.
BERC officials recalled the pressure under which they issued the COIPP licence to the United power. There are seven other commercial power plants, all holding COPP licence, which is awarded exclusively for commercial power production, despite desperate attempts to have it changed to COIPP.
The United Power has been lobbying for some time now for a COIPP licence for its third commercial power plant, Leviathan Global Bd Ltd, a 53MW power station under construction at Karnaphuli EPZ.
‘The United Power is enjoying absolute monopoly in business,’ said energy expert Mohammad Tamim, who was a member of the committee that prepared the White Paper on the state of economy made public on December 2.
The United Power did not have to look back after its venture of the two COIPP power plants made eye-watering profits. Since 2011, the United Power set up seven more power plants—all IPPs—with installed generation capacity of 1,041MW.
United Power’s company secretary Elias Howladar told New Age that he did not have any comments about any of the matters.
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