Capacity charge is model of robbery
Says IMED in a report on the power sector
The practice of paying capacity charges to power plants is a "model of robbery" and is a reflection of ill-motivated contracts, said the Implementation Monitoring and Evaluation Division (IMED) in a report recently.
"This system is not sustainable," the report said.
The government has paid Tk 90,000 crore in capacity charges in the last 14 years, which is increasing every year.
In the last 12 years, the Bangladesh Power Development Board (PDB) has made a loss of Tk 154,190 crore. But its losses would amount to Tk 113,532 crore in fiscal 2021-22 and 2022-2023.
It is a "false claim" that if the system of capacity payment does not exist, investment in the power sector will not come.
Only two conditions are enough to attract investment: allowing the private power producers to sell electricity at a higher rate of 25 to 50 percent depending on the location and a minimum offtake of one-fourth or half the electricity generated.
The report found only 56 percent of the total power generation capacity was being used.
There will be no solution to the fund crisis in the power and energy sector until the government does not stop the high payment for per unit electricity, capacity charges, fuel supply and selling lands to them at low cost, easy bank loan, duty-free import opportunity etc, it said.
The report also blamed the indemnity act of 2010 on the power sector.
"This is a barrier to accountability -- the per unit production cost of some power plants goes past Tk 100. Such mischief should be stopped immediately."
The report reviewed the progress of 67 power division projects taken from 2013 by PDB, Power Grid Company of Bangladesh, Desco, DPDC, NESCO, Sreda, EGCB, Power Cell, Rural Electrification Board, RPCL and so on.
"The situation is disappointing," it said.
Even after seven years, some projects' implementation is just 10 percent. None of the projects made any progress in the first year.
There are separate agencies to implement the power transmission and distribution infrastructure, but due to a lack of coordination, some power plants are sitting idle after completion in the absence of transmission and distribution systems.