It’s outrageous that “capacity charges” – that predatory costing exercise that allows power plants to take a big bite out of our budget regardless of whether the power is bought or produced – will have to be paid amid ongoing power outages and depleting forex reserves. This is despite the fact that the government, on Monday, shut down all diesel-fired power plants due to low fuel stocks. But it is bound to pay their capacity charges nonetheless. Data disclosed by the Bangladesh Power Development Board (BPDB), the country’s sole electricity buyer, shows how this exercise has been a huge drain on our scant resources.
The BPDB paid Tk 16,785 crore in capacity charges in the first nine months of the 2021-22 fiscal year for 22,118MW daily power generation capacity, although it had not been able to use more than 14,000MW a day during that period. Earlier, it paid Tk 18,977 crore in 2020-21, and Tk 18,123 crore in 2019-20. To put things into perspective, these numbers dwarf the subsidy packages the government set aside for the power sector in the corresponding years. For example, the subsidy package was Tk 7,400 crore in the 2019-20 budget, Tk 8,900 crore in the 2020-21 budget and Tk 12,000 crore in the 2021-22 budget. Capacity charge is a trap that the government set for itself, for reasons that continue to elude us, and we’re having to pay for that even during a time of austerity.
What could possibly be the reason for all that trouble? Nothing about it makes business sense. The current demand for electricity in the country ranges between 14,000MW and 14,500MW. But due to the crisis of gas imported from international sources, the government is producing 12,000-13,000MW, but continues to pay for the unutilised power. Already, the government has announced up to two hours of “load shedding” across the country. Citizens from many areas, however, have reported longer and frequent spells of outage. The question is, how effective will these measures be to tackle the energy crisis?
According to experts, a comprehensive assessment of the situation was not done before undertaking these measures. For example, despite the closure of diesel-run power plants, diesel use in other sectors is bound to rise. The generators being used in farms, factories and offices are all run on diesel; load shedding will only increase the use of fuel to run these generators. Clearly, piecemeal solutions will not work against a crisis that has, frankly, developed over years. A big part of the problem is the capacity charges, which have to be paid in dollars, another big barrier to the drive to save foreign currency. Therefore, we think the government should urgently renegotiate the terms with power plants to stop capacity payments. This will take a huge burden off our collective shoulders, and help us focus on the wider issues.
